Mauritius


  1. Mauritius
  2. Mauritius as a Gateway to Africa
  3. Why should China route Investment through Mauritius to Africa
  4. Taxation in Mauritius
  5. Useful links

Mauritius

Mauritius is situated in a strategic time zone  of GMT +4 in the Indian Ocean and 2000 Kilometers of the south eastern coast of Africa.  Mauritius with its long history of economic and political stability; innovative legislation; quality infrastructure and international trade agreements is well place to meet the challenges and international business opportunities of the millennium.  Mauritius has signed 43 Double Taxation Avoidance Agreements  with 43 countries  including 16 DTAA’s with African countries .  Mauritius’ reputation as a well regulated finance centre is of paramount importance to international business.

 

Mauritius as a Gateway to Africa




Today Mauritius is emerging as an International Financial Centre (“IFC”) for Africa. According to the Global Competitive Index 2012-13, Mauritius is, with South Africa, the continent’s top performers.

Mauritius is a member of regional blocs, such as Southern African Development Community (“SADC”), Common Market for Eastern and Southern Africa (“COMESA”) and Indian Ocean Rim Association(“ IOR”).

Mauritius has no foreign exchange restrictions therefore free repatriation of funds is allowed.

Mauritius is positioning itself as the arbitration center in Africa.

Mauritius is a Recognized Stock Exchange by the UK.

Mauritius has signed Double Taxation Avoidance Agreements (DTAAs) with a number of African countries.  Mauritius currently has tax treaties with 14 African states (Botswana, Lesotho, Madagascar, Mozambique, Namibia, Rwanda, Senegal, Seychelles, Swaziland, South Africa, Tunisia, Uganda, Zambia and Zimbabwe). Mauritius has also signed DTAAs other African which are awaiting ratification.

Capital gains tax (CGT), where imposed in Africa, is generally levied at a rate ranging from 30-35%. However, the DTAAs in force in Mauritius restrict taxing rights of capital gains to the country of residence of the seller of the assets. Since there are no CGT in Mauritius, the potential tax savings for the Mauritius registered entity are significant.

Mauritius has signed bilateral Investment Promotion and Protection Agreements (IPPAs) with 19 African countries: Benin, Botswana, Burundi, Cameroon, Comores, Republic of Congo, Ghana, Guinea Republic, Kenya, Madagascar, Mauritania, Mozambique,  Rwanda, Senegal, South Africa, Swaziland, Tanzania, Tchad and Zimbabwe. Out of these 19 IPPAs, 6 are in force.

 

Why should China route Investment through Mauritius to Africa




Mauritius has strong cultural links with China which is the world’s second largest economy with a stable outlook at 6-7% GDP Growth providing valuable opportunities for investment.

Mauritius is aspiring to become the Renminbi (“RMB”) Trading Hub in Africa       
China  does not have many DTAA with African countries whereas Mauritius has DTAA with several African countries.   Capital Gains Tax (CGT) in Africa is generally levied at 30 to 35%.  However, DTAA in-force in Mauritius restrict, in most cases, taxing rights of capital gain to Mauritius. As there is no CGT in Mauritius, there is potential for significant tax savings.

Mauritius being an investment hub for Africa, with investment friendly regulation and policy is well placed to capture China’s outward direct invest (“ODI”) volume of which has increased by 18%.

China continues to reform its financial system and open its capital markets, offering huge investment opportunities for Global investors. Cash rich Chinese companies and individuals who are looking for overseas investment opportunities can use Mauritius to go to Africa which is an attractive destination.

With its strategic geographic location between Asia and Africa and its stable and robust regulatory environment, Mauritius looks set to strengthen its position as an investment gateway to Africa.

Chinese Companies are going Global either through organic expansion or acquisition. 

 

Taxation in Mauritius


Mauritius has a simple tax regime. All residents are taxed on their worldwide income on an accrual basis. A company is deemed resident if it is incorporated in Mauritius or if central management and control is located there. The latter provides for such companies that are incorporated outside Mauritius but with the strategic decisions being carried out in Mauritius or the board of directors meeting there.  Non-resident companies are taxed on income that is sourced from Mauritius.


Foreign Tax Credits

Category 1 Global Business Companies (“GBC1”) companies are liable to taxes at the rate of 15% but provided that the GBC1 owns at least 5% of an underlying company, credit will be available on foreign tax paid on the income out of which the dividend was paid (‘underlying foreign tax credit’).
When a company not resident in Mauritius, which pays a dividend, has itself received a dividend from another company not resident in Mauritius (a ‘secondary dividend’) of which it owns either directly or indirectly at least 5% of the share capital, such dividend will be allowable as foreign tax credit and an underlying foreign tax credit will also be available.
Tax sparing credits are available – Under this regime the effective rate of taxation in Mauritius can be reduced, as a long stop provision exists whereby GBC1 companies may elect not to provide written evidence to the Commissioner of Income Tax showing the amount of foreign tax charged and enjoy a deemed taxation at 80% of the normal tax rate of 15%. Thus, the use of this long stop provision in isolation would reduce the effective rate of tax in Mauritius from 15% to 3%.
Mauritius has
No withholding tax on remittance of branch profits.
No withholding tax on interest, royalties and dividends.
No capital gains tax.
Carry forward of losses limited to 5 years except for losses attributable to annual allowances.
Royalties, interest and service fees payable to foreign affiliates are allowable as expenses provided they are reasonable and correspond to actual expenses incurred.
No estate duty, inheritance or wealth taxes.
No stamp duties, registration duties and levy.
Zero rated Value Added Tax for global business transactions.
Trusts can elect to be non –resident and be tax-exempt in Mauritius.
Trusts can hold GBC1 licences and avail of DTA benefits.

Permanent Establishment

The term "permanent establishment" means a fixed place of business through which the business of an enterprise resident in the treaty partners' jurisdiction is wholly or partly carried on in Mauritius and usually includes:

  1. a place of management;
  2. a branch;
  3. an office;
  4. a factory;
  5. a workshop;
  6. a warehouse, in relation to a person providing storage facilities for others;
  7. a mine, an oil or gas well, a quarry or any other place of extraction of natural resources;
  8. an installation or structure used for the exploration of natural resources;
  9. a building site or construction or assembly project, including supervisory activities connected therewith, of duration mentioned in tax treaties ( please refer to Highlight of Tax Treaties in Annex 4).
  10. a dependent agent