Setting Up a Business in Mauritius: A Guide for Indian Entrepreneurs
Mauritius, an island nation in the Indian Ocean, has emerged as a prime destination for foreign investment, particularly for Indian businesses. Its strategic location in the Indian Ocean between Africa and Asia, robust legal framework, and favorable economic conditions make it an attractive option for entrepreneurs. This guide outlines the essential steps and considerations for establishing a business in Mauritius.
A Pathway Forward
1. Business Environment
- Ease of doing business
Mauritius ranks high in the World Bank’s Ease of Doing Business Index and is ranked as the most business-friendly country in Africa. The country has streamlined processes for business registration, licensing, and compliance, making it easier for entrepreneurs to start and operate their businesses. In addition to being considered as foreign for tax purposes in Mauritius, there is no foreign exchange controls, capital gains tax, nor withholding tax.
- Hybrid legal system
Mauritius boasts a unique hybrid legal system that combines elements of French civil code and common law, reflecting its diverse historical influences. This system allows for a flexible approach to legal interpretation and application, accommodating both local customs and international legal standards. As a result, Mauritius has cultivated a favorable environment for business and investment, while ensuring the protection of individual rights and social justice.
- Political stability
The political environment in Mauritius is stable, with a well-established democratic system. This stability fosters a positive climate for investment and business operations, reducing risks associated with political uncertainties.
- Robust regulatory framework and good corporate governance
Mauritius is recognized for its robust regulatory framework and strong corporate governance, as highlighted by the Ibrahim Index of African Governance (IIAG). The country has implemented comprehensive policies that promote transparency, accountability, and ethical business practices, contributing to a stable investment climate. This effective governance structure not only enhances economic growth but also fosters public trust in institutions.
- Diversified economy and culture
- Extensive bilateral and multilateral agreements with African countries, including in areas of taxation, trade and investment
- Reliable banking system
- Qualified and experienced workforce (English and French)
2. Types of Business Structures
- Choosing a Business Structure
Indian entrepreneurs can opt for various business structures, including:
- Authorised Company (AC)
The Authorised Company (AC) is a company that has its business activities and control and management outside of Mauritius. Therefore, an AC is not considered as tax resident of Mauritius.
Conducting business outside of Mauritius, an AC is appropriate for activities such as Investment holding, property holding, international trade, consulting and IT services, shipping etc. ACs are not allowed to conduct business in Mauritius or in specific activities such as banking, financial services etc.
To set up an AC, majority of shares or voting rights must be held by non-Mauritius residents
- Global Business Company (GBC)
A Global Business Company (GBC) in Mauritius is a Company that has it’s main business operations principally carried on from within Mauritius, with persons who are resident outside Mauritius. A GBC is ideal to strategically manage and grow your business, making it an effective corporate vehicle for international tax planning.
Confidentiality protects GBC as no person or body may disclose information on the GBC unless otherwise specified.
Although the rate of corporate tax in 15%, GBCs can benefit from partial exemption regime, whereby a company can avail exemptions on 80% of its’ income streams if it meets certain substance requirements.
- Trusts
Mauritius has evolved into a trustworthy jurisdiction for establishing and operating Trusts. Offshore Trusts are especially used for the management, preservation and transmission of assets. Mauritius provides an ideal choice for setting up a Trust thanks to its’ robust legal framework.
- Choosing to set up a Trust in Mauritius allows investors to channel their investment withing the African continent and benefit from the tax advantages the island offers.
- The benefits of setting up a Trust in Mauritius are:
- No Capital Gains Tax, Estate Duty or Withholding Tax. No inheritance tax and acts as a good estate planning mechanism.
- In the case of a Settlor’s bankruptcy or liquidation, a Mauritius Trust will not be void or voidable
- Tax rate is 15% and no further tax on distribution. Discretionary Trusts allows for tax planning and wealth protection
- Exempt from forced heirship limitations
- Can be set up for non charitable purposes
- Confidentiality
- Avoidance of probate
3. Incorporation Process
- Registration
To register a business in Mauritius, follow these steps:
- Name Reservation: Submit a name reservation application to the Registrar of Companies
- Documentation: Prepare necessary documents, including:
- Business plan
- Proof of identity and address
- Details of shareholders and directors
- Submit Application: Complete the registration process online or at the Registrar's office.
- Licensing
Depending on the business activity, additional licenses or permits may be required. Check with relevant authorities for specific regulatory requirements.
4. Tax Benefits
- Corporate Tax Rate
Mauritius offers a competitive corporate tax rate of 15%. Various incentives are available for sectors such as ICT, renewable energy, and manufacturing, providing opportunities for reduced tax liabilities.
- Double Tax Avoidance Agreement (DTAA)
Mauritius has a DTAA with India, which helps prevent double taxation and promotes bilateral trade and investment. This agreement is particularly beneficial for Indian businesses looking to expand their operations.
5. Sector Opportunities
- Key Industries
Investors can explore diverse sectors, including:
- Information Technology: Growing demand for IT services and software development.
- Tourism: A robust tourism sector offering opportunities in hospitality and travel services.
- Financial Services: Mauritius is a financial hub with a range of banking and investment services.
- Agriculture: Opportunities in agro-processing and organic farming
- Free Trade Agreements
Mauritius has established free trade agreements with several countries, providing access to regional markets and enhancing export potential.
6. Local Partnerships
- Joint Ventures
Collaborating with local firms can provide valuable insights into the Mauritian market, help navigate regulatory challenges, and enhance operational efficiency. Consider forming joint ventures with established local businesses to leverage their market knowledge.
7. Visa and Work Permits
- Investor Visa
Foreign investors can apply for a residence permit, allowing them to live and work in Mauritius. The application process typically requires proof of investment and a business plan.
Conclusion
Setting up a business in Mauritius presents a wealth of opportunities for Indian entrepreneurs. The country’s favorable tax regime, stable political environment, and strategic location make it an ideal hub for expanding into African and Asian markets.
Before making any commitments, conduct thorough market research and consider consulting with local experts or legal advisors to ensure compliance with all regulations and maximize your chances of success.
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