Doing Business in Mauritius www.bakertillyinternational.com
This guide has been prepared by Baker Tilly Mauritius, an independent member of Baker Tilly International. It is designed to provide information on a number of subjects important to those considering investing or doing business in Mauritius. Baker Tilly International is the world s 8 th largest network of independent accounting and business advisory firms by combined fee income, and is represented by 154 firms in 133 countries and 27,000 people worldwide. Its members provide high quality accounting, assurance, tax and specialist business advice to privately held businesses and public interest entities. This guide is one of a series of country profiles compiled for use by Baker Tilly International member firms clients and professional staff. Copies may be downloaded from www.bakertillyinternational.com. Doing Business in Mauritius has been designed for the information of readers. Whilst every effort has been made to ensure accuracy, information contained in this guide may not be comprehensive and recipients should not act upon it without seeking professional advice. Facts and figures as presented are correct at the time of writing. Up-to-date advice and general assistance on Mauritian matters can be obtained from Baker Tilly Mauritius, contact details can be found at the end of this guide. June 2015
Contents 1 Fact Sheet 2 2 Business Entities and Accounting 4 2.1 Companies 4 2.2 Partnerships 6 2.3 Branches 7 2.4 Auditing and Accounting Requirements 8 2.5 Filing Requirements 9 3 Finance and Investment 10 3.1 Exchange Control 10 3.2 Banking and Sources of Finance 10 3.3 Investment Incentives and Restrictions 11 4 Employment Regulations 12 4.1 General Employment Matters 12 4.2 Visas 13 4.3 Trade Unions 13 5 Taxation 14 5.1 Corporate Income Taxes 14 5.2 Personal Taxes 15 5.3 Employment Related Costs and Taxes 16 5.4 Withholding Taxes on Payments Abroad 17 5.5 Value Added Tax (VAT) 17 5.6 Other Taxes 18 5.7 Tax Incentives for Businesses 20
2 1 Fact Sheet Facts and figures as presented in sections 1 through 4 are correct as at 20 May 2015. Geography Location: Area: Land boundaries: Coastline: Climate: Terrain: Southern Africa 2,040km² None Indian Ocean Time zone: GMT +4 Tropical; the dry winters run from May to November and the humid, wet, hot summers run from November to May Small coastal plain rising to discontinuous mountains encircling a central plateau People Population: 1,261,208 (July 2014) Religion: Hindu 48.5%, Roman Catholic 26.3%, Muslim 17.3%, other Christian 6.4%, other 0.6%, none 0.7%, unspecified 0.1% (2011 estimates) Language: Creole, Bhojpuri, French and other languages, including English Government Country name: Government type: Capital: Administrative divisions: Republic of Mauritius Parliamentary democracy Port Louis Nine districts and three dependencies
Doing Business in Mauritius 3 Political situation The unicameral National Assembly has a maximum of 70 seats. The Head of State is the President, who is elected by the National Assembly for a term of five years. The Head of Government is the Prime Minister, who is appointed by the President. The Council of Minsters is appointed by the President on the recommendation of the Prime Minister. Economy GDP per capita: US$9,477.8 (2013) GDP real growth rate: 3.2% (2013) Labour force: 575,700 (2014 estimate) Unemployment: 7.5% (Q4 2014) Currency (code): Mauritian rupee (MUR)
4 2 Business Entities and Accounting 2.1 Companies A company may be formed by one or more members or shareholders and may be: Limited by shares where the liability of members is limited to the amount unpaid on the shares held by them Limited by guarantee where the liability of members is limited to the amount that the member has undertaken to contribute if the company is wound up Limited by shares and by guarantee, or Unlimited where the liability of members is unlimited. A company is a public company unless its application for incorporation or constitution states that it is a private company. 2.1.1 Private companies A private company: Must not have more than 25 shareholders Must not offer or subscribe its shares or debentures to the public, and May restrict the right to transfer its shares. A private company is deemed to be a small private company if: The company s turnover in the last preceding accounting period is less MUR50m (or other prescribed amount), and The company does not hold a Category 1 Global Business Licence (see 2.1.4). 2.1.2 Company administration and management Companies are administered by annual meetings of the shareholders, and are managed by at least one director who must be a natural person who is ordinarily resident in Mauritius. Companies are also generally required to appoint at least one secretary who is generally required to be a natural person who is ordinarily resident in Mauritius. Small private companies and companies holding a Category 2 Global Business Licence (see 2.1.4) are not required to appoint a secretary. The Registrar of Companies may approve the appointment of a firm or corporation to act as secretary if certain conditions are satisfied. Companies (excluding small private companies) are required to appoint an auditor. Small private companies may choose to appoint an auditor.
Doing Business in Mauritius 5 2.1.3 Company names and registration The company name must not be the same as the name of another entity already registered or so similar that it may mislead. The name will not be reserved or registered if the Registrar of Companies deems it to be offensive. An application for incorporation of the company must be sent to the Registrar of Companies. The Registrar will issue a certificate of incorporation if all legislative requirements have been complied with and if the relevant fee has been paid. An incorporated company has a separate legal personality. 2.1.4 Global Business Licence Resident corporations wishing to conduct business outside Mauritius may apply to the Financial Services Commission for a Category 1 Global Business Licence or a Category 2 Global Business Licence. An application for a Category 2 Global Business Licence may only be made by private companies whose proposed business activity does not include: Banking Financial services Holding, managing or dealing with collective investment funds or schemes Providing registered office facilities, nominee services, directorship services, secretarial services or other services for corporations, or Trusteeship services. An application for a Global Business Licence (Category 1 or Category 2) must be made through a management company. The Financial Services Commission is required to consider whether the conduct of business will be, or is being, managed and controlled from Mauritius when considering an application for a Category 1 Global Business Licence. Corporations holding a Global Business Licence are held to be conducting business outside Mauritius. However, the following transactions and dealings may be made with residents of Mauritius: Opening and maintaining a bank account in Mauritius in the Mauritian currency for day to day transactions resulting from ordinary operations in Mauritius (Category 1 licence holders only) Leasing, holding, acquiring or disposing of immovable property or any interest in immovable property situated in Mauritius (subject to legislation) (Category 1 licence holders only) Investing in securities listed on a licensed securities exchange (Category 1 licence holders only)
6 Opening and maintaining a foreign currency bank account (Category 1 and Category 2 licence holders) Holding any share, debenture, security or any interest in, or otherwise dealing or transacting with, a corporation holding a Global Business Licence (Category 1 and Category 2 licence holders) Entering into business relationships with a Management Licence holder or a legal practitioner or qualified auditor in Mauritius (Category 1 and Category 2 licence holders), and Employing staff resident in Mauritius (Category 1 licence holders only). Corporations holding a Category 1 Global Business Licence must be administered by a management company. Corporations holding a Category 2 Global Business Licence are required to have a registered agent in Mauritius who must be a management company. Corporations holding a Global Business Licence are required to pay an annual licence fee to the Financial Services Commission. 2.2 Partnerships 2.2.1 General partnerships A general partnership may be formed by two or more partners. Partners are jointly and severally liable to an unlimited extent for the debts and obligations of the partnership. 2.2.2 Limited partnerships A limited partnership may be formed by one or more general partners with one or more limited partners. General partners are jointly and severally liable to an unlimited extent for the debts and obligations of the partnership. The liability of limited partners is generally limited to the amount of their agreed contribution.
Doing Business in Mauritius 7 2.2.3 Limited partnerships under the Limited Partnerships Act 2011 A limited partnership may be formed under the Limited Partnerships Act 2011 by one or more general partners with one or more limited partners. General partners are jointly and severally liable to an unlimited extent for the debts and obligations of the partnership. The liability of limited partners is generally limited to the amount of their agreed contribution. Limited partnerships are required to have a written partnership agreement. The general partner/s may choose for the limited partnership to have legal personality by signing a declaration to that effect. The declaration must be submitted with the application for registration of the partnership filed with the Registrar of Limited Partnerships. Limited partnerships are required to have and maintain a registered agent in Mauritius unless one of the general partners is resident in Mauritius (for natural persons) or incorporated, formed or registered under the laws of Mauritius (for non-natural persons). Limited partnerships may apply for a Category 1 Global Business Licence. Limited partners may not take part in the management of the partnership, but may inspect the partnership s books and examine and inquire into the state and prospects of the business. Limited partners that do take part in the management of the partnership are liable for the debts and obligations of the partnership as if they were a general partner. 2.3 Branches A foreign company may generally carry on business or have a place of business in Mauritius. A foreign company is required to file certain information and documentation with the Registrar of Companies within one month of commencing business or establishing a place of business in Mauritius. The foreign company is required to have a registered office in Mauritius to which communication and notices may be sent. The registered office must be open to the public for at least four hours a day (excluding Saturdays and public holidays).
8 2.4 Auditing and Accounting Requirements Companies are required to keep accounting records that correctly record and explain the company s transactions. Financial statements must be prepared within six months after the balance sheet date and must fairly show the financial position, financial performance, and (where stated) the cash flow of the company. Companies with one or more subsidiaries on the balance sheet date are also required to prepare group financial statements within six months after the balance sheet date. Financial statements must generally be prepared in accordance with the International Financial Reporting Standards (IFRS). Private companies (excluding small private companies) and public companies (excluding public interest entities) may alternatively prepare their financial statements in accordance with the IFRS for SMEs. Small private companies are required to prepare their financial statements in the form and content prescribed by regulations. Companies that are required to appoint an auditor (see 2.1) are required to have their financial statements/group financial statements audited. Corporations holding a Category 1 Global Business Licence are required to have their financial statements audited. This requirement does not apply to corporations holding a Category 2 Global Business Licence. Accounting records and financial statements may be prepared in English or French. If accounting records are kept in another language, the records must be translated into French or English at intervals of no more than seven days. Financial statements must generally use the Mauritian currency. The Registrar of Companies may permit the use of a foreign currency in certain circumstances. Companies are generally required to keep their accounting records and copies of their annual financial statements relating to the preceding seven accounting periods. The Registrar of Companies may permit that such records and statements be kept for a shorter period by providing notice in writing to the company.
Doing Business in Mauritius 9 2.5 Filing Requirements Companies (excluding small private companies) are required to file their annual report (if applicable), copies of their financial statements/group financial statements, and the auditors report with the Registrar of Companies within 28 days after the financial statements are required to be signed. Companies are generally required to file an annual return with the Registrar of Companies, generally within 28 days of the annual general meeting. Certain companies are exempt from this requirement, including small private companies whose annual turnover does not exceed MUR20m (unless there is a change in the company s shareholding or in the composition of the board of directors or any other related particulars), and qualifying enterprises registered under the Small and Medium Enterprises Development Authority Act on or after 2 June 2015 for a period of eight years from the date of incorporation. Small private companies are generally required to file a financial summary (or financial statements) with the Registrar of Companies with their annual return. Small private companies with an annual turnover not exceeding MUR20m may file a financial summary prepared on a cash basis showing only a profit and loss statement. Qualifying enterprises registered under the Small and Medium Enterprises Development Authority Act on or after 2 June 2015 will not be required to file their financial summary for a period of eight years from the date of incorporation. After this period, such enterprises may file a financial summary prepared on a cash basis showing only a profit and loss statement. Companies holding a Category 1 Global Business Licence are required to file their financial statements and auditors report with the Financial Services Commission, generally within six months of the close of its financial year.
10 3 Finance and Investment 3.1 Exchange Control There are no foreign exchange controls. Anti-money laundering legislation requires banks, financial institutions, cash dealers, and members of relevant professions or occupations to undertake customer due diligence and to report suspicious transactions to the Financial Intelligence Unit (FIU). 3.2 Banking and Sources of Finance The Bank of Mauritius (BOM) is responsible for (amongst others) monetary and financial stability, payment systems, and issuing national currency. Commercial banks operating in Mauritius provide the majority of financial services. There are generally no restrictions on foreigners opening bank accounts in Mauritius (certain documentation and minimum deposit may be required), or on accounts containing foreign currency. The Stock Exchange of Mauritius (SEM) provides a marketplace for listing and exchanging securities.
Doing Business in Mauritius 11 3.3 Investment Incentives and Restrictions For business related incentives, see 5.7. There are generally no restrictions on foreign business investment in Mauritius. However, foreign ownership may not exceed set limits in certain sectors, including casinos and television broadcasting.
12 4 Employment Regulations For employment tax considerations, see 5.3. 4.1 General Employment Matters 4.1.1 National employment standards Legislation provides minimum rights and conditions of employment in Mauritius (certain exclusions apply), including maximum daily working hours, rest periods, paid annual leave entitlement, paid public holiday entitlement, paid sick leave entitlement, and maternity and paternity leave rights. Employers are required to provide a written statement on the terms of employment if the employee is engaged for more than 30 consecutive working days. The written statement must include: Employer name and address National pensions registration number Business registration number/national identity card number of the employer Nature of activities Employee name, sex, date of birth and address National identity card number of the employee/passport number for noncitizens Date of commencement of employment Place of work Grade, category or class of employment Salary and particulars of remuneration, including payment intervals, and Normal working hours. An employer or employee may generally terminate a contract of employment by providing 30 days notice (subject to legislative protections for employees). Payment of wages may be made in lieu of notice. Employers are generally required to pay a severance allowance to employees that have been continuously employed for one year or more if the contract is terminated by the employer, subject to exceptions.
Doing Business in Mauritius 13 4.1.2 Pensions and other benefits Social security contributions (see 5.3.2) generally provide associated benefits. 4.2 Visas Citizens of certain countries (including the United Kingdom and the United States) do not require a visa for short term visits to Mauritius. Visas available for short term visits to Mauritius include the Tourist Visa and the Business Visa. For further information on visa requirements, visit http://passport.govmu.org/ English/Pages/default.aspx. Citizens of other countries wishing to live and work in Mauritius need to apply for an Occupation Permit. Retired citizens of other countries wishing to live in Mauritius need to apply for a Residence Permit. A Permanent Residence Permit allows citizens of other countries to live and work in Mauritius for 10 years. Non-citizens wishing to acquire property in Mauritius are generally required to make an application to the relevant Minister. If the application is granted, the Minister will issue a certificate authorising the acquisition of the property, subject to any terms and conditions prescribed by the Minister. A certificate is not required in certain circumstances, including in respect of a lease for industrial or commercial purposes for a term not exceeding 20 years, in respect of a tenancy agreement not exceeding four years, and in respect of inherited property. Foreigners may purchase residential property in Mauritius under the Real Estate Scheme (RES) or the Integrated Resorts Scheme (IRS). From 1 July 2015, the Real Estate Scheme (RES) and the Integrated Resorts Scheme (IRS) will be replaced with the Property Development Scheme (PDS) and the Smart City Scheme (SCS). 4.3 Trade Unions A recognised trade union of workers or a joint negotiating panel may negotiate and conclude a collective agreement on the terms and conditions of employment with an employer.
14 5 Taxation Facts and figures as presented in section 5 are correct as at 20 May 2015. 5.1 Corporate Income Taxes Resident companies, which are companies incorporated in Mauritius or whose central management and control are in Mauritius, are generally subject to tax on their worldwide income. Non-resident companies are generally subject to tax on their income from sources in Mauritius, subject to the terms of any relevant tax treaty. Corporations holding a Category 2 Global Business Licence are not considered resident for the purpose of tax treaties and are not subject to tax in Mauritius. The standard corporate income tax rate is 15%. Due to the availability of tax credits, companies holding a Category 1 Global Business Licence are generally subject to tax at an effective rate of up to 3%. An alternative minimum tax generally applies where the tax payable by the company is less than 7.5% of its book profit (as defined). The minimum tax is the lesser of: 7.5% of the taxpayer s book profit, or 10% of the aggregate amount of dividends declared and amounts distributed in shares in lieu of dividends. The minimum tax does not apply in certain circumstances, including to companies holding a Category 1 Global Business Licence. Dividends paid by a resident company are not subject to tax. Unutilised losses can generally be carried forward for up to five years; conditions may apply to the carry forward of losses resulting from a takeover or merger. The five year carry forward limit does not apply to losses associated with annual allowances claimed by the taxpayer in respect of capital expenditure incurred from 1 July 2006. There are no provisions for the carry back of losses. Group tax consolidation is not available in Mauritius; consequently losses cannot be offset against the profits of another company in the same group. The standard tax year is the calendar year. An alternative 12 month period may be used. From 1 July 2015, the standard tax year will be the 12 month period commencing 1 July.
Doing Business in Mauritius 15 Tax returns are generally due for filing no later than six months from the end of the month in which its accounting period ends. Certain taxpayers, including companies whose gross income and exempt income exceeds MUR10m and corporations holding a Category 1 Global Business licence, are required to file their tax returns and make tax payments electronically. Companies are generally required to make advance payments of corporate income in respect of income from the first three quarters of the tax year. The advance payments are due within three months from the end of the relevant quarter. Companies are not required to make advance payments if their gross income in the immediately preceding accounting year did not exceed MUR4m (MUR10m from 1 July 2015), or there was no chargeable income. Any remaining corporate income tax due is payable by the deadline for filing the corporate tax return. 5.2 Personal Taxes Resident individuals are generally subject to tax on their worldwide income. Nonresident individuals are generally subject to tax on their income from sources in Mauritius, subject to the terms of any relevant tax treaty. Individuals are subject to personal income tax on their taxable income (subject to deductions and allowances) at the rate of 15%. There are no separate inheritance or gift taxes. There is no wealth tax.
16 5.3 Employment Related Costs and Taxes 5.3.1 Fringe benefits There is no separate fringe benefits tax. Unless specifically exempt, the taxable value of benefits-in-kind forms part of the gross income of individuals and is subject to personal income tax. 5.3.2 Social security costs Employers and employees are generally required to make the following social security contributions (subject to caps): Contribution Category Employer Rate Employee Rate National Pension Fund contribution 6% 3% National Savings Fund contribution 2.5% 1% Training levy 1.5% N/A 5.3.3 End of year bonus Employers are required to pay an end of year bonus to employees who have been continuously employed for at least one year. The bonus should equal one twelfth of the employee s earnings during the year. 75% of the bonus must be paid at least five working days before 25 December and the remainder by the last working day of the year.
Doing Business in Mauritius 17 5.4 Withholding Taxes on Payments Abroad The rates of withholding tax on the following payments made abroad by companies are generally: Dividends Interest Royalties Rate None 15%; exempt in certain circumstances (such as interest paid by a corporation holding a Global Business Licence and certain interest paid by banks) 15%; exempt in certain circumstances (such as royalties paid by a corporation holding a Global Business Licence) For payments made to recipients in countries with which Mauritius has a double tax treaty, the rates of withholding tax may be reduced under the terms of the treaty. 5.5 Value Added Tax (VAT) VAT is generally levied on the supply of goods and services in Mauritius and on the importation of goods. The standard VAT rate is 15%. A 0% rate applies to certain supplies, including exports of goods, certain foodstuffs, certain books and other printed materials, pharmaceutical products, and transportation services by sea or air. Certain supplies are VAT exempt, including medical, dental and hospital services, educational services, and certain financial services. The VAT registration threshold is annual turnover from taxable supplies exceeding, or likely to exceed, MUR4m (MUR6m from 1 July 2015). Voluntary registration is available where compulsory registration does not apply. Registered traders can generally recover the VAT with which they themselves are charged on their purchases of goods and services, subject to conditions and possible exceptions.
18 5.6 Other Taxes 5.6.1 Stamp duty Stamp duty is generally imposed at varying rates on the registration of certain documents. 5.6.2 Registration duty Registration duty is generally levied at varying rates on the registration of any deed witnessing a transfer of property, subject to exemptions. The duty is imposed on the value of the property at the time of registration. 5.6.3 Property taxes Land transfer tax is generally levied on the registration of a deed of transfer or a deed witnessing the transfer of property or of shares in a company, subject to exemptions. The tax rate is generally 5% and is payable by the transferor. An annual campement tax at the rate of 0.5% is generally imposed on the owners of campement sites (as defined) on the market value of the campement (after allowable deductions, including campement site tax), subject to exemptions. An annual campement site tax is generally imposed on the owners of campement sites in designated zones, subject to exemptions. The tax varies from MUR2 to MUR6 per square metre of the site, depending on the zone. Tax is generally levied on the registration of a deed of transfer or a deed witnessing the transfer of leasehold rights in State land, subject to exemptions. The tax is levied on the open market value of the leasehold rights at the rate of 20%. The tax is payable by the transferor and transferee in equal proportion.
Doing Business in Mauritius 19 5.6.4 Special bank levy Banks are generally subject to a special annual levy. The levy is imposed on book profit (as defined) and operating income (as defined), or chargeable income, from the preceding year as follows: Income Income from banking transactions with non-residents and from corporations holding a Global Business Licence Levy on Book Profit Levy on Operating Income Levy on Chargeable Income 3.4% 1% N/A Other income N/A N/A 10% From 1 July 2018, the rates will be 1.7% on book profit and 0.5% on operating income, regardless of the source of income. The levy is not imposed on banks that made a loss in the preceding year, or on banks whose book profit in the preceding year did not exceed 5% of operating income. 5.6.5 Solidarity levy on telephony service providers A solidarity levy is generally levied on telephony service providers (as defined) in respect of their book profit and turnover in the preceding year. The levy is 5% of book profit and 1.5% of turnover. The levy is not imposed if the telephony service provider made a loss in the preceding year, or if the telephony service provider s book profit in the preceding year did not exceed 5% of turnover.
20 5.6.6 Corporate Social Responsibility (CSR) fund Companies are generally required to establish a Corporate Social Responsibility (CSR) fund each year. The company is required to place an amount equivalent to 2% of chargeable income from the preceding year into the fund to be used to: Implement an approved programme by the company Implement an approved programme under the National Empowerment Foundation, or Finance an approved non-governmental organisation (NGO). From 1 July 2015, the fund is to be used to implement a CSR Programme in accordance with the company s own CSR framework. Certain companies are not required to establish a CSR fund, including companies holding a Category 1 Global Business Licence and licensed banks in respect of certain transactions. 5.6.7 Excise taxes Excise taxes are imposed on certain goods, including alcohol, alcoholic beverages, non-alcoholic beverages, tobacco products, petroleum products, and motor vehicles. 5.7 Tax Incentives for Businesses 5.7.1 Research and development (R&D) expenditure Capital expenditure in respect of scientific research may be deducted from taxable income at the rate of 50% each year. 5.7.2 Small company tax exemption From 1 July 2015, small companies that qualify under a scheme in section 5A of the Small and Medium Enterprises Development Authority Act that are registered under the Act on or after 2 June 2015 will be exempt from income tax for a period of eight years. The eight year exemption period begins on the later of the income year beginning after 1 July 2015, or the income year in which the qualifying small company starts its activity.
Doing Business in Mauritius 21 5.7.3 Freeports Freeport certificate holders are not subject to tax in respect of qualifying activities carried out in a Freeport zone. 5.7.4 Capital expenditure tax credit Companies that manufacture or produce in Mauritius any of the following may benefit from a tax credit: Computers, electronic or optical products Electrical equipment Film Furniture Jewellery and bijouterie Medical and dental instruments, devices and supplies Pharmaceuticals or medicinal chemicals Ships and boats Textiles Wearing apparels. In order to benefit from the tax credit, the company must incur capital expenditure exceeding MUR100m on new plant and machinery (excluding motor cars) used in the qualifying activity between 1 January 2014 and 31 December 2018. The tax credit equals 5% of the cost of plant and machinery and applies in the year of acquisition and the following two years. Any unused tax credit may be carried forward for up to five consecutive years from the year in which the expenditure was incurred.
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