While its white sandy beaches, turquoise lagoons and beautiful scenery are an exceptional setting, its attractions do not end there. Halfway between Africa and Asia, Mauritius is gradually becoming an international island. The country has built a strong reputation as a reliable, reliable investment platform.
This small island state, which combines art and business lifestyle, has one of the highest growth rates in sub-Saharan countries: in three decades, Mauritius has shifted from an economy dominated by sugar cane to a diversified and sophisticated service economy.
With a per capita GDP of more than USD 10,000, 85 per cent literacy rate, a modern social and educational infrastructure, a dynamic economy, a changing landscape, marked by the modernization of towns and the urbanization of sugar crops, Mauritius is emerging as a small state.
Entrepreneurs, Mauritius can only seduce you, there are so many good reasons to settle or invest in it.
A favorable political context
Mauritius is known for its political and social stability. The country has enjoyed political stability since its birth as an independent nation in 1968. The government is democratically elected every 5 years, and successive powers have all demonstrated their commitment to a market economy that fosters entrepreneurship and foreign investment.
A crucible of one of the oldest civilizations in the world, Mauritius is a rare example of social peace and a multicultural society.
The country also offers:
-Separation of powers (guaranteeing respect for civil liberties) and concern for good governance (Mauritius is a signatory to the United Nations Convention against Corruption).
-Vitality of civil society.
-Independence of the media.
-Independence of the judicial system and political power offering the same guarantees to foreigners as to Mauritian citizens.
-New or emerging economic sectors in Mauritius
Accompanying economic growth, the banking system, which was originally centered on a few local institutions, has gradually grown to include 20 banks. The presence of an active stock exchange and the recent creation of a derivatives market on commodities and currencies make Mauritius a financial center in its own right. Insurance activities are expanding.
Moreover, due to its political stability, appropriate legislation and the presence of numerous tax treaties, Mauritius has developed a domiciliation activity of offshore companies. It currently houses more than 25,000 of them, a large part of which is oriented towards India (presence of a favorable tax treaty). In total, the contribution of the financial sector saved by the crisis of recent years represents 10% of the GDP of Mauritius.
Although it has not yet become the “cyber-island” it wishes to become due to lack of sufficiently trained personnel and high-performing technical infrastructures, Mauritius has made significant advances in the field of information technology And Business Process Outsourcing. Growth of more than 16% per year since 2004, these activities already contribute about 6% to the GNP and constitute a priority axis of development.
The country has chosen several other centers of diversification: construction of luxurious residences for an international clientele, a Chinese project to create a platform for exchanges with African countries, medical tourism, formation of a “knowledge hub”.
Favorable conditions for investors
Mauritius has a dynamic financial sector, in addition to modern infrastructure and a port. The Mauritian government is particularly encouraging foreign investment. It has created an enabling environment for investment by providing a range of incentives, as well as facilities to attract foreign direct investment and institutional investors, including:
-Creation of a business simple and fast: it is now possible to register a commercial company (‘domestic company’) in less than 4 days.
-Flexible labor law and recruitment of professional expatriates authorized.
-The security of investments is ensured through international commitments, including:
The main argument behind investing in Mauritius, apart from its governance, is its tax, light.
The main thrusts of the Mauritian tax system are the following:
• 15% tax on corporate profits
• 15% tax on personal income (withholding tax)
• No tax on capital gains
• No taxation on dividends
• No restrictions on repatriation of profits, dividends and capital
• 80% tax credits on offshore companies – GBL1 (effective tax rate of 3%)
Mauritius has also concluded treaties of double taxation with more than thirty countries, ratified and applicable, including with France since December 11, 1980. The FPPIs supplement this tax arsenal. The French-Mauritian double taxation agreement is particularly favorable to the French investor.
The main purpose of this Convention is to prohibit the double taxation of income which has its source in a State and which is collected by a taxpayer resident in another State.
Any natural person domiciled in France is subject to an unlimited tax liability, irrespective of nationality. As a result, all immovable property owned by it, whether located in France or outside France, is included in the taxable wealth tax base (ISF).
Value added tax
Introduced in 1998, value added tax applies to all goods and services intended for end-use or resale. It is similar to French VAT. Its rate is 15%.
Any entity with an annual turnover in excess of Rs 2 million (1 Euro = Rs 40 or so) and any person practicing a profession such as accountant, engineer, real estate agent on his account, irrespective of his annual turnover must Register with the Mauritius Revenue Authority. Consequently, the registered company will be obliged to invoice VAT on goods and services subject to VAT. This same company will be able to recover VAT on its purchases.
Persons not resident in Mauritius may be reimbursed at the time of their departure the amount of VAT paid on purchases made during their stay, provided that they are re-exported.
N.B: Some basic foodstuffs, services sold outside Mauritius or imported into the country benefit from a zero rate, as well as certain goods exported under certain conditions.
In addition, the following services are not subject to VAT: rental of housing, education-related services, transport, and certain financial services.
Activities for international or non-resident customers
Two types of offshore companies exist for carrying out activities to an international or non-resident clientele in Mauritius:
– The companies Global Business License 1 (GBL1) are companies with a tax residence in Mauritius and benefiting from the agreements of non-double taxation and reduced rates on their Mauritian tax.
The basic tax rate is 15%, but a lump sum import credit of 80% of the Mauritian tax is granted to account for the taxes paid abroad on the financial amounts transferred to Mauritius. As a result, the taxation of GBL1 amounts to 3% of profits.
They are not allowed to conduct transactions in local currency with residents or to hold real estate holdings in Mauritius. Banking, insurance and fund management activities are possible.
– The Global Business License category 2 (GBL2) companies are non-resident having business in Mauritius. They are therefore tax-free entities and cannot avail themselves of the reductions provided for in the double taxation agreements in force in Mauritius.
They must be registered with an authorized agent (Trust or Management Company).
-For example, GBL2 can be used as a trading company, invoicing, international contracts.
-A Regulated Framework for Real Estate Investing
-All contracts and documents are drawn up and recorded in French by notarial means.
-Deposits are recorded on escrow accounts.
-For all regularization of notarial deed, all documents required by the Act (those concerning the promoter and those concerning the purchaser) must be obtained.
-Sale in the Future Completion State (VEFA): as is the case in France, the VEFA provides an unlocking of progressive funds, in line with the progress of the works, and this until the delivery and the lifting of reservations.
-Guarantees of completion of works are subscribed by the promoters to the banks present, international or local.
With the increasing demand and marketing projects, the current government decided in May 2015 to harmonize and introduce more vigorous control over the island’s property programs. There are therefore no longer separate schemes under the name IRS and RES, but a single legal framework is now in force, referred to as the PDS “Property Development Scheme”.
The 9-points summarizing PDS are:
1. Projects must be fully owned.
2. Minimum size of 0.4220 hectare (1 acre), but not exceeding 21.105 hectares (50 acres).
3. Minimum of 6 residences of high standing.
4. Public spaces to promote social interaction and sense of community.
5. High-class infrastructure and commercial facilities.
6. Management services for residents, including safety, maintenance, gardening, solid waste disposal and household services.
7. Social contribution in terms of social services, community development and other facilities for the benefit of the community.
8. A non-resident (foreign investor) is eligible for permanent resident status if its investment exceeds USD 500,000.
9. The registration tax at a single rate of 5%