header-area-background-wrapper
dismiss-alert
site-banner
center-left-menu
center-right-menu

Major changes are happening in Mauritius

10 September 2018
Brought into force on 31st July 2018, The Finance (Miscellaneous Provisions) Act enacted several major changes to legislation that will impact Mauritius’ Global Business Companies regime. The Mauritius FSC (Financial Services Commission) is yet to issue relevant changes to their guidelines that should further clarify the provisions of the Act.
 
Briefly, the two major changes to the Act are:
  1. 1. Rebranding GBC1 regime to GBC and introducing new substance requirements for GBCs
  2. 2. Abolishing GBC2 regime, replacing it with an “Authorised Company Regime”

These changes are not immediate and will apply for 1st January 2019.
 

Further Details of GBC2 Abolition

Along with the renaming of GBC1 to GBC and the abolition of GBC2, the 1st January will also see the establishment of a new type of company. Known as “the Authorised Company”. Furthermore, the GBL1 License will be known as the GBL License.
 
Existing companies operating under both GBC1 and GBC2 registered prior to 1st January 2019 will be able to continue with their existing provisions but the date at which they must change depends on when the license was issued.
 
  • Licenses issued from 16th October 2017 will be able to continue under the 2008 Financial Services Act only until 31st December 2018
  • Licenses issued before 16th October 2017 will be able to continue under the 2007 Financial Services Act until 30th June 2021

 
After these respective, dates, all GBC2 licenses will expire and all companies regardless of when they were initially licensed, are required to comply with the new rules set down in the Authorised Company requirements.
 

Further Details on the Authorised Company Criteria

  1. 1. What is an Authorised Company?

    Essentially, this is a company that conducts or aims to conduct their business operations (and its effective management) outside of Mauritius. There are some other criteria which are set down in current FSC rules.
  2. 2. Beneficial Interest, Control, and Shareholding

    Most shares, rights to vote and other beneficial interest in the company’s operation must be held by a person or people who are not citizens of Mauritius.
  3. 3. Requirements of a Registered Agent

    Authorised Companies are required to have a permanently-registered agent in Mauritius. This must be a management company and their responsibilities should include board minutes, company resolutions, record keeping and other transaction record archiving, and anything else required of FSC.
  4. 4. Authorisation

    Must be sought through a Mauritius Management Company and to the FSC who will authorise it.
  5. 5. Tax and the Authorised Company

    FSC deems Authorised Companies as “non-resident” to obtain the tax benefits. This means they are exempt from paying income tax in Mauritius. The Authorised Company are, however, legally obliged to submit a return of income to the Mauritius Revenue Authority. The time limit for doing so is six months after the year-end.

 

What are the New GBC Rules?

The most important point to be aware of here is that Section 71 of the Financial Services Act is now repealed. A new section has taken its place. Here is a summary of the changes:
 
  • It is required that the individual who will hold most shares, voting and legal rights, or other methods of beneficial interest, is not a Mauritius citizen
  • Most of the GBC’s business should be executed and conducted outside of Mauritius while the country must remain its core place of operation (income-generation and activities)
  • The GBC is required to employ a reasonable number of people with relevant qualifications to conduct their core business operations - directly or indirectly
  • A minimum expenditure is required for a GBC, directly proportional to its activity level
  • It is an offence to operate without a GBL. The fine for such an offence is up to one million Mauritian rupees.

 

GBCs and New Tax Details Explained

Previously, companies in possession of a Category 1 GBL were required to pay a 15% income tax on chargeable income, payable in Mauritius. However, such companies were also entitled to a tax credit called Foreign Tax Credit. This is valued at an equivalent of 80% of the tax paid in a foreign nation.
 
This will be abolished from the 1st January 2019 along with the other changes. In its place will be an 80% exemption against the following income types so long as the GBC is eligible based on criteria:
 
  • Dividends but subject to the amount not permitted as deductions in a foreign country
  • Interest earned from foreign sources
  • When profit is attributed to the establishment of a company in a foreign nation
  • When the income from foreign sources is derived from a so-called Closed-End Fund, a “Collective Investment Scheme” or CIS, a CIS administrator or manager, or financial advisor. Also, that from asset managers with FSC licensing
  • Companies whose primary business is the lease of aircraft and shipping
Subscribe to our newsletter

Share this news on:

 

SFM Login & Registration