Offshore Jurisdiction Review: Mauritius

(Editor's note: Some of the information in this article is based on Streber's personal experiences and has not been independently verified. As always, do your own due diligence.)

Owing to its long history of agriculture, freedom, and democracy, Mauritius has developed into a stable and attractive offshore jurisdiction with some truly unique features. Mauritius offers everything from stable banks to unique Global Business Company (GBC) legislation.

History

A true tropical paradise, the Republic of Mauritius is located off the east coast of Madagascar out in the Indian Ocean. Mauritius first appears in history books around the early 1500s when Portuguese sailors first arrived at the then-uninhabited island. The first name of the island was Ilha do Cirne (Island of the Swan). This was later changed to Mauritius by Dutch settlers, who arrived in the late 1500s, naming the island after Prince Maurice van Nassau.

The Dutch turned Mauritius into an agricultural colony, importing sugarcane and wildlife. However, the Dutch were unable to make Mauritius a profitable colony and abandoned it in 1710. Five years later, in 1715, the French arrived at the neighboring island Réunion.

The French changed the name of Mauritius to Isle de France, and the island fell under the jurisdiction of the French East India Company. This name stuck until 1810, when the island again changed ownership and became a British colony during the Napoleonic Wars; the island was renamed British Mauritius. Port Louis, named after French king Louis XV, had by then been established as the island's capital.

After the British took over the island, the economy of Mauritius started to blossom, and social reforms were made. Slavery was abolished in 1835. Many former slaves purchased lands from disinterested or demoralized Indian land owners. The end of the 1800s and beginning of the 1900s saw rapid growth in Mauritius' infrastructure, with foreign workers being brought in to supplement the local population.

Because of the friendly terms between Mauritius and the United Kingdom, several thousand Mauritians offered to sign up for the British army in World War II; however, Mauritius never played an important role in the war. Mauritius held its first general elections three years after the end of World War II, in 1948. Twenty years later, in 1968, Mauritius became independent and joined the Commonwealth of Nations (an intergovernmental organization of 54 member states that were mostly territories of the British Empire).

Aside from a brief period of political instability and turmoil immediately after the independence, Mauritius has remained a stable and peaceful democracy. Today it is a diversified low to middle-income country. Owing to its long stability, and exceeding most other African nations in human development, Mauritius has seen massive foreign investment. The major industries in Mauritius are agriculture, tourism, textiles, fish processing, financial services, and a growing IT/telecom sector.

Mauritius Offshore Advantages

There are two Global Business Company (GBC) classes: Class I for residents and Class II for non-residents.

Mauritian companies are used for everything from holding to investing to trading.

GBC I—Resident Company

The GBC I is quite unique among offshore jurisdictions. It is a low-tax vehicle (3% corporate tax for non-resident sourced profits; 15% for resident sourced profits) that has access to Mauritius' 40 double tax agreements (DTAs). What sets this apart from other jurisdictions is that there are no public records of the directors or members of GBC I, ensuring the directors' and members' privacy. Annual general meetings must be held in Mauritius, but can be held by proxy.

GBC I companies can trade within Mauritius. They are structurally similar to private limited companies.

All this sets GBC I apart from international business companies (IBCs) and makes it a one-of-a-kind structure, being both anonymous and tax efficient.

GBC II—Non-Resident Company

The GBC II is not a resident company and, as such, pays 0% tax. It does not have access to DTAs.

GBC II is nearly indistinguishable from an IBC, in turn similar to private limited companies. They cannot trade within Mauritius.

Limited Partnership

This is yet another innovative company structure and legal form in Mauritius. It is only a few years old but is already seeing rising usage.

LPs consist of one or more general partners and one or more limited partners. Limited partners cannot manage the company or execute documents on behalf of the company, though the legislation does protect limited partners from misuse by general partners.

Global Business Licenses

GBC I/GBC II and LP companies can hold a GBL (Global Business License). This allows a company to undertake restricted business activities otherwise not permitted. A codified list is available on the FSC Mauritius website.

Similar to GBC, the GBL comes in two classes. GBL 1 license holders must have a resident director, whereas a GBL 2 license holder can opt not to have one.

Tax rate for LP depends on license, but varies between 0% and 15%.

Banking in Mauritius

Mauritius is home to many banks, which are of generally high quality in terms of customer service and products offered.

It is one of few non-European jurisdictions to have adopted the IBAN system (International Bank Account Number), though it is not a member of the single euro payments area (SEPA). Many individuals and companies in Europe take IBAN for granted and will often find it easier to transact with someone who has an account with an IBAN number.

While there is currently no deposit insurance, the Central Bank of Mauritius is looking into whether it is viable or necessary. The major banks are considered too big to fail, and there is a perceived insurance, based on the government stepping in when banks have failed in the past. Nowadays, Mauritius banks are stable by international standards, and the nation as a whole enjoys stable credit ratings.

Merchant accounts are available, though many banks will turn away foreign companies.

Banking is generally a positive experience: Fees are reasonable; there are many banks to choose from; card products are plenty; and multi-currency accounts are widely available. The banks ask for humble minimum balances (or sometimes, none), making Mauritius excellent for start-up offshore businesses.

Mauritius Disadvantages

While Mauritius enjoys a superb international reputation for the stability of its institutions, it is nonetheless a tax haven and, as with other offshore tax havens, may be stigmatized.

Incorporating in Mauritius is often more expensive than other offshore jurisdictions; especially, GBC I or GBL I license companies cost more than IBCs or LLCs in other jurisdictions. However, the extra costs for a company in Mauritius may be well worth every penny, in case you want to access Mauritius’ rather wide range of DTAs or can benefit from a more reputable zero tax jurisdiction.

Living in Mauritius

Mauritius is surprisingly well-connected for an island out in the middle of the Indian Ocean, with many flights to Europe, Africa, and Dubai. The island is a major tourist spot, with pristine beaches, interesting local cuisine, and plenty of sunshine.

While it is easy to get in as a tourist, becoming a permanent resident is not quite as easy. One should keep in mind that it is a small, remote island, and living there is not for everyone.

It is somewhat popular for high-net-worth retirees. The government has a special program for retired persons with an annual net income of at least USD $40,000. Infrastructure is comparable to other island nations. The airport is busy with tourists coming and going. Efforts are being made to improve the nation's internet connectivity, currently ranking as the 78th fastest country in the world.


Streber works as a consultant and director for a wide range of companies and has broad experience in offshore banking, offshore incorporation (formation and maintenance of offshore companies), taxation, privacy, ecommerce, merchant accounts, online payments, and all other things the privacy-minded entrepreneur might find interesting. You can read Streber's blog on offshore incorporation and offshore banking.

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