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MAURITIUS – OFFSHORE SECTOR

fun and business in Mauritius offshoreThe offshore international financial services centre has now been in operation for a decade. The positioning of the island as a business hub to service the region along with its natural comparative advantages of geography and time zone

MAURITIUS – OFFSHORE SECTOR

The offshore international financial services centre has now been in operation for more than a decade. The positioning of the island as a business hub to service the region along with its natural comparative advantages of geography and time zone, as well as its highly qualified human resource base and the network of tax treaties continue to be at the basis of the success of that sector.

Mauritius has, as a tax planning jurisdiction focused on the development of its Global Business sector (formerly known as the offshore sector) on the use of its growing network of Double Taxation Avoidance Treaties (DTAs). The expanding network of these DTAs reinforces the seriousness of Mauritius as a tax efficient jurisdiction for structuring investment abroad in the Global Business sector. Mauritius has been used as a route for investment into emerging regions such as India, China, Pakistan and many other countries

Double Taxation Avoidance Treaties

Partner Country Date of Signature Date of Entry into force
Bangladesh 21.12.2009 15.09.2010
Barbados 28.09.2004 28.01.2005
Belgium 04.07.1995 28.01.1999
Botswana 26.09.1995 13.03.1996
China 01.08.1994 05.05.1995
Croatia 06.09.2002 09.08.2003
Cyprus 21.01.2000 12.06.2000
France 11.12.1980 17.09.1982
Germany 07.10.2011 07.12.2012
India 24.08.1982 11.06.1985 **
Italy 09.03.1990 28.04.1995
Kuwait 24.03.1997 01.09.1998
Lesotho 29.08.1997 09.09.2004
Luxembourg 15.02.1995 12.09.1996
Madagascar 30.08.1994 04.12.1995
Malaysia 23.08.1992 19.08.1993
Mozambique 14.02.1997 08.05.1999
Namibia 04.03.1995 25.07.1996
Nepal 03.08.1999 10.11.1999
Oman 30.03.1998 20.07.1998
Pakistan 03.09.1994 19.05.1995
Qatar 28.07.2008 28.07.2009
Rwanda 20.04.2013 04.08.2014
Senegal 17.04.2002 15.09.2004
Seychelles 11.03.2005 22.06.2005
Singapore 19.08.1995 07.06.1996
South Africa 17.05.2013 28.05.2015
Sri Lanka 12.03.1996 02.05.1997
Swaziland 29.06.1994 08.11.1994
Sweden 01.11.2011 07.12.2012
Thailand 01.10.1997 10.06.1998
Tunisia 12.02.2008 28.10.2008
Uganda 19.09.2003 21.07.2004
United Arab Emirates 18.09.2006 31.07.2007
United Kingdom 11.02.1981 26.10.1987
Zambia 26.01.2011 04.06.2012
Zimbabwe 06.03.1992 05.11.1992
Arab Republic of Egypt 19.12.2012 10.03.2014
Gabon 18.07.2013 *
Kenya 07.05.2012 *
Guernsey 17.12.2013 *
Monaco 13.04.2013 08.08.2013
Nigeria 10.08.2012 *
Republic of Congo 20.12.2010 08.10.2014
Russian Federation 24.08.1995 *
Malta 15.10.2014 23.04.2015
Morocco 25.11.2015 *
Jersey 03.03.2017 *
Republic of Ghana 12.03.2017 *

Note:

* Agreements awaiting ratification

** A Protocol for the amendment of the Double Taxation Avoidance Agreement between Mauritius and India has been signed on 10th May 2016.

 

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Mauritius Offshore Structures

Mauritius has political and economic stability with sound finance and business related legislations. It encourages non-citizens to invest in the development of its economy for many years now. There is an abundance of professionals and business hubs to cater for the demands for international and globalised business.

Types of Offshore Stuctures

A company which intends to carry on global business and avail itself of an incentive rate of taxation must apply to the Financial Services Commission (“FSC”) for a Global Business Licence.  There are two categories of Global Business Licence: a Category 1 Global Business Licence (“GBL1”) and a Category 2 Global Business Licence (“GBL2”).

 

Category 1 Global Business (“GBL 1”) Licence

A GBL 1 is a resident corporation, that is a body corporate formed or registered under the Companies Act 2001 or a trust, société, partnership or any body of persons governed by the laws of Mauritius, which proposes to conduct business outside Mauritius and in a currency other than  the Mauritian Rupees.

 

Under the Financial Services Act 2007 (“FSA”), a GBL 1 company may conduct any business activity provided that the activity is not unlawful and contrary to public interest and will not affect the good repute of the Republic of Mauritius as an International Financial Services Centre.  The FSC reserves the right to decline an application for a GBL 1 on the foregoing grounds under section 72 (4) of the FSA.

 

In considering an application for or a renewal of a GBL 1 Licence, the FSC shall have regard to whether the conduct of business will be or is being “managed and controlled” from Mauritius.

 

Matters to which the FSC shall have regard, as it may deem relevant in the circumstances, in determining management and control are as follows:

  •  Whether the GBL 1 company has at least 2 directors, resident in Mauritius, of sufficient caliber to exercise independence of mind and judgment;
  •  Whether it maintains, at all times, its principal bank account in Mauritius;
  •  Whether it keeps and maintains, at all times, its accounting records at its registered office in Mauritius;
  •  Whether it prepares or proposes to prepare its statutory financial statements and causes or proposes to have such financial statements to be audited in Mauritius;
  •  Whether it provides for meetings of directors to include as least 2 directors from Mauritius.

 

The FSC requires that the GBL 1 company be at all times managed by a management company.

Taxation of a GBL 1

A corporation for the purpose of a GBL 1, as defined above, includes a company formed in Mauritius or elsewhere, a trust, société or a partnership or any body of persons governed by the laws of Mauritius, which proposes to conduct business outside Mauritius and not in the Mauritius Rupees. A GBL 1 is necessary where the company intends to access Mauritius’s network of tax treaties.  A company holding a GBL 1 License is subject to Mauritian corporate income tax at the rate of 15%.

The practical effect of the 15% rate is mitigated by the Income Tax (Foreign Tax Credit) Regulations 1996, which provides for a deemed  foreign tax credit of 80% of the 15% charged. Full credit is allowed for withholding tax suffered at source, reducing the effective tax rate to 0-3% depending on the quantum of withholding tax. There is no tax on capital gains and no withholding tax on dividends and royalties.

The benefits of the tax treaty network are available to a GBL 1 company which is a resident of Mauritius. A resident is defined as a person (including a company) who is liable to taxation in Mauritius by reason, inter alia, of having its place of effective management and control in Mauritius.  A GBL 1 company is required to fulfil the following requirements for a Tax Residence Certificate (“TRC”) to be issued by the Mauritius Revenue Authority in Mauritius:

  1.  The Company shall at all times have at least two directors resident in Mauritius. The resident directors shall be of appropriate calibre who can exercise independence of mind and judgement.
  2. All meetings of the Board of Directors shall be held, chaired and minuted in Mauritius. (Tele-board meetings are permitted provided they are chaired and initiated in Mauritius.).
  3.  The Company shall at all times keep its accounting records at its registered office in Mauritius.
  4.  The Company shall ensure that all its banking transactions are channeled through a bank account in Mauritius.

 

A company with a GBL 1 may be used, inter alia, for any of the following:

Investment holding company

A GBL 1 company is the most commonly used vehicle for investment holding as it is the vehicle that can access Mauritius’ network of double taxation avoidance treaties.

Protected Cell Company

The Mauritius Protected Cell Companies Act 1999 (the “PCC Act”) provides for the establishment of a special form of company, the protected cell company (the “PCC”), which can have one or more cells.  The key to the PCC concept is that one cell and its assets are legally segregated from, and cannot be contaminated by, liabilities arising in relation to the other cells and their assets.  The PCC is a single legal entity and its cells do not constitute legal persons separate from the PCC.

The PCC can be used for asset holding, structured finance business, collective investment schemes and external insurance business and will, therefore, hold a GBL 1 License.

Insurance business

The promoter of a PCC, instead of setting up a separate captive insurance company for the business of each client, sets up a single PCC, and writes the business for each client into a separate cell within the PCC, thereby reducing costs.  Claims relating to one cell are protected by law from claims relating to another cell.

The PCC structure is attractive for

(i)       life assurance (life assurance companies can legally separate the assets of the pension and individual policy holders);

(ii)      composite insurers (where the assets of a life assurance business need to be legally separated from those of non-life business);

  • conglomerates (where several cells are established, each holding a particular insurance exposure and segregated in relation to geographical location, corporate divisions or types of risk to the exposures);
  • rent-a-captives (where the owners of the PCC offers capital financing to clients who because of their size, would find it uneconomical to set up their own individual captive arrangement); and
  • multinationals (where the companies can operate their captive insurance, treasury and other functions in a single entity using the same core capital).

Collective investment fund business

The PCC structure offers the promoters of collective investment vehicles the flexibility and cost-savings of a multi-class fund, without the risk that the losses associated with the investments of one class diminishing the profits associated with the investments of another class.

The PCC can cater for separate exposures in different countries, for different degrees of risk, for different investment sectors, and for different investment types such as debt equity and swaps.

Limited life company

A company which would be eligible for a GBL 1 License or GBL 2 License can be formed as a limited life company whose existence will terminate automatically upon the occurrence of a certain event such as the bankruptcy, death, withdrawal, expulsion or dissolution of a member.  By establishing its Mauritian subsidiary as a limited life company, an investor can fulfil the characteristics of a partnership for US tax purposes, namely limited life and restricted transferability of shares. A limited life company can also be managed by its members or by a manager rather than by a board, so allowing for the possibility of decentralized management, another of the four partnership characteristics.

 

In designating the company as a limited life company, it can be considered as a partnership for US purposes without the need to provide for the fourth partnership characteristic, that is unlimited liability with the risks which that involves.

 

The advantage of obtaining US partnership status is that the income of the Mauritian company can then be attributable to its partners and can be pooled in the USA with other partnership income, so making most efficient use of available credits.
 

 Category 2 Global Business (“GBL 2”) Licence

A GBL 2 is issued where the global business is carried on by a private company incorporated or registered under the Companies Act 2001 and proposes to conduct a business activity other than those set out in the Fourth Schedule of the FSA set out below:

 

  • Banking;
  • Financial services;
  • Carrying out the business of holding or managing or otherwise dealing with a collective investment fund or scheme as a professional functionary;
  • Providing of registered office facilities, nominee services, directorship services, secretarial services or other services for corporations; and
  • Providing trusteeship services by way of business.

 

A GBL 2 is ideal for a company which intends to carry on trading and assets holding.  It is tax-exempt and, therefore, non-resident for tax purposes in Mauritius and so cannot access the Mauritius’ network of double taxation avoidance treaties.

Trusts

The Mauritius Trusts Act 2001 brings out the best features of modern trust legislation to offer the following advantages:

A trust can be formed by a resident or non resident of Mauritius.

  • There is no requirement to register the trust with any registrar.
  • It is a very flexible vehicle and can be formed as:
  • a trust for beneficiaries (life interest trust, discretionary trust, protective trust, asset protection trust), or
  • a purpose trust (commercial purpose trust or charitable purpose trust).
  • It can have a managing trustee in Mauritius and a custodian trustee in another jurisdiction.
  • The forced heirship rules of other states will not be enforced by the courts in Mauritius.

 

An attractive feature of Mauritius as a trust domicile is the ability for a high net worth settler to set up his own private trust company (“PTC”) which will act as corporate trustee of his family trust or trusts in the place of a professional trust company. The PTC structure is typically used where the settlor owns a trading empire that a professional trust company would be reluctant to hold on trust because of the responsibility involved.  Instead, the business is held on trust by the PTC and the professional trust company/ Management Company is only involved in an administrative role and by providing a director on the board of the PTC.

A private trusteeship arrangement is defined by the FSC as an arrangement whereby:

 

(a)      A high net worth individual sets up a company (known as a PTC) that will act as a trustee in respect of his own assets that would be settled in a trust or a number of trusts;

(b)      The PTC will act as trustee solely to a limited number of trusts, either for the benefit of a single family, or for the benefit of different branches of a family or for distinct (but related) family groups as opposed to the public in general; specifically, the PTC will not act as professional trust company;

(c)      The client base of the PTC comprises a high net worth family or family group who are able to evaluate and assume the financial risks and economic consequences of their investments; and

(d)      The administration, investment management services or investment advice required in connection with the family trusts are outsourced by the PTC under a service agreement to licensed financial institutions or service providers such as a management company.

 Regional headquarter companies

Mauritius has developed as a prime regional base for multinationals- it is strategically located at crossroad of Africa, South-East Asia and the Indian sub-continent- and the attraction for multinational companies to set up their regional office on the island has been assisted by The Development Incentives (Regional Headquarters Scheme) Regulations 2000 (the “Regulations”).  The Regulations enable a domestic company governed by the Companies Act 1984 to obtain a regional headquarters certificate. A regional headquarters certificate is granted to a company which provides at least two headquarter services and has a minimum paid-up capital of Rs 1,000,000. Incentives offered under the scheme include a ten-year tax holiday on foreign-sourced income and a 15 per cent corporate tax rate thereafter, tax-free dividends, duty-free concessions and concessionary personal income tax for expatriate employees. The scheme is designed to develop Mauritius as a headquarters base for the region.  The scheme is, in particular, of interest to international companies operating in any Member State of a regional economic bloc to which Mauritius is also a member such as the SADC, COMESA, IOC and IOR who are willing to set up their headquarters on the Island.

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About Mauritius Jurisdiction

Mauritius as an international financial services centre is attractive to investors due to   a number of advantages:

 Mauri

Well-regulated and white-listed by the OECD and FATF.

  • Politically and socially stable country
  • Independent status – it is not a member of the EU and is, therefore, not subject to the Savings Directive.
  • Not burdened with a “tax haven” image
  • The Privy Council in London is its ultimate Court of Appeal.
  • A preferred domicile for the world’s premier financial institutions and multinational companies using Mauritius for their investment funds and tax treaty structuring in India, south-east Asia and the Far East.
  • Excellent service standards at competitive costs, high quality human resources based on a population of 1.2 million.
  • Pool of qualified professionals with bilingual capabilities in English and French.
  • Located in a convenient time zone at GMT+4.
  • Very attractive tax treaty network.
  • Good quality infrastructure and telecommunications.
  • State-of-the-art company and trust legislation.
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How to get out of debts?

There was a time you were living a normal happy family life. You had ambitions and great plans. You started with a long-term housing loan. Then took credit to furnish your house, and conceivably even got a new car. Or you may just have an ordinary life and started buying everything on credit to satisfy your demands. In next to no time you find yourself crunching under debts.  The months seem elongated and the bills continue piling. We know how it feels like when you can’t meet family’s expectations. How often you are irritated when your kids ask for money due to your own frustrations? Every month-end is a permanent battle between your pocket and your debts. While your friends are enjoying healthy lifestyle, you are struggling in an ocean of debts.

Debts shackles

You avoid social gathering and do not know who to turn to. You are too stressed and your mind has stopped functioning. Do not surrender! FACE IT! Get hold of yourself and try the following strategies now.

1.                Accept you are in a crisis In the middle of a crisis, first accept your circumstances and take necessary action. Take a paper and pencil or sit in front of computer and make list of:

Interest charges

All outstanding

Monthly recurrent bills; i.e. rent, electricity, etc

2.                Avoid taking any further debts

Sittings on huge debts? Say no to further debts. According to the “Association Pour Emprunteurs Abusés” (APEA), three out of four Mauritian households are struggling to pay their debts. Survey carried shows that 50% per cent of Mauritian households have contracted loans for property acquisition. While 75% are struggling to pay their monthly dues and 15% are facing severe problems because of over-borrowing.

3.                Organise a garage sales

Look around your home and you will find many useless stuff staying idle and occupying space. If you spot anything lying around for two to three years, get rid of it.  Sell all metals and scraps. Old books, bicycle, tools, you name it.

4.                Plan your spending

Start planning your expenses and always try to spend less than planned, this will allow you to make some savings and make you eligible for paying the debt more easily. Once you plan your expenses it will help you in future to stay on track and save for the future.

5.                Try using some online tools There are many applications and online tools on the Internet to help you prepare a budget. If you are an information technology user, why not use these online tools to keep track of your debts and expenses. There are also mobile applications which you carry with you and consult at any time.

6.                Re-check your expenses Check your spending list again and find if you can cut off anything from the list. Any item cut from your list will save your money. Bottom line: cut all unnecessary spending.

7.                Try to stick with your budget

Make a budget and try to stick with it, even try to reduce your budget to save money. The other best way is to earmark part of budget for debts repayment and keep the remaining slice for household expenses.

8.                Involve the family

Try to involve your family in your saving plan. Involve your spouse and your kids in this venture. Also identify the party who is spendthrift or a compulsive shopper and let the other partner manage the finance. You cannot do it alone. Make sure you got all your support to go through this crisis.

9.                Buy Quality used products instead of buying new ones

While you are in debt, opt for second-hand or used items. You can find many interesting stuff on the web or newspapers. Save your money and always look for secondary market alternatives when you need to buy a new item.

10.             Look for rebates and promotion sales

When you buy groceries or any household items, look for rebates and promotions. Beware of the “buy two get one free” adverts. You end spending more. Plan your shopping list well in advance before going to malls and do not buy what you do not need. This will help you save money and eventually ease your budget.

11.             Take a second job

Not able to cut expenses, try a part-time job. Increase your income and payoff your debts easily. This technique is useful for you as you may continue doing job after paying off all your debts to save money for rainy days.

12.             Pay long-term debts first

Long-term loans are costly in terms of interest. Consider making a balloon payment whenever you have any excess funds.  This will allow you to cut interest running over 15-20 years. The best tactics is to concentrate on the highest interest paying debts.  Alternatively, you may pay the small debts first and then concentrate on the big one later, if this can motivate you.

13.             Pay bills on time

Pay your bills within due dates. Avoid fines and penalties resulting from late payments.  Make a checklist of recurrent bills and stick it on your fridge or other prominent places if necessary. This way you will not forget when they become due.

14.             Never pay a debt with the help of a new debt

Don’t take new debt to pay an old one. People who do so are just fooling themselves and getting entangled further in the spiral of debts. Don’t cut corners and use cheap methods to pay your debts. You do not want to hide in your own home when your friends or debt collectors knock at your door.

15.             Show determination

On the road to recovery, at times you will still need more money. Your car won’t stop breaking down or you may bear medical expenses or have to visit a sick relative. Don’t let such incidents distract you from your goal. Take it as a test for your commitment, stay firm!

16.             Celebrate achievements

Celebrate your achievement whenever a debt is paid; this will give you a warm feeling of relief. That doesn’t mean that you should go to five-star restaurants and spend hundreds of rupees. Give yourself a treat: buy some cakes and enjoy it you’re your family.

17.              Avoid borrowing money

Never borrow again and live within your means. Never get back to the old habit of borrowing money. The sooner you deal with your debts issues, the faster you will be on track. Never under-estimate the load of debts, it can ruin you. Stay afloat, concentrate on your objectives, make a firm commitment and stick to your plan. Best of luck to you!

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11 Common Mistakes by Entrepreneurs

In today’s world of rapidly growing micro and macro-economic ideas one of the best business strategiesis to become anentrepreneur instead of searchingyour dream jobs. You canplanto become a successfulentrepreneurby acquiring intelligent and progressive business skills.These business skills and techniques will help youto establish a successful and productive entrepreneurship.One of best way to do so isto learn from experiences of successful predecessor entrepreneurs and avoiding mistakes that they had been doing in their business growth history.You should know how they had managed to get out of the tough circumstances by adopting intelligent business plan and strategy.

mistakes

Following are 11 most common mistakes that are done by young and immature entrepreneurs. As an entrepreneur you must be aware of all these and know best techniques to avoid and overcome these mistakes.

1. Visionless Approach

You must think and plan wisely before getting into any business.Setting a clear vision and comprehensive planning behind any business is an essential factor to start it. Keep in mind the long term goals associated to the business, your target audience, organizational structure, strength and well-versed and clear understandable job responsibilities for each emplo 

2. Lack of Financial Planningand Management

As an entrepreneur you must plan intelligently to manage finance related to your business. Avoid all the ways that lead to any sort of money mismanagement and there should be proper professional department or team to manageand record transactions related to the money matters. You must be aware of possible ways and approaches to remain within the financial limits.

3.     Greedy Approach

Every entrepreneur must keep an important thing in mind that setting goal of getting richer and richer by anyway possible is not a wise approach. Although earning money is core purpose of owning a business and establishment of an entrepreneurship. But, it should be within parameters of intelligent thought process related to the overall business process. It means that you should not overlook aspects such as investment on marketing and trust building of clients etc. other than ‘revenue generation’, which can help to promote and prosper your business.

4.     Non-Consultative Behavior

Often entrepreneurs hesitate to consult and seek a professional advice from consultants due to cost consideration. But, this approach is not good as any entrepreneur is a human-being and possibility of making an error at any time.Entrepreneurs can commit serious nurtured business related mistakes at times. Therefore, it is important to admit the mistake at once its identified or highlighted at any stage and do not hesitate to take appropriate corrective measure to correct it.

5.     Lack of Patience

According to the research 60 percent of the businesses remain unsuccessful due to impatience shown by the respective entrepreneurs.Impatience is one of most dangerous factors that do negatively affect and ruin any business. No business can grow overnight in such manner that it starts to generate high revenue and sales on very next day. There is a very famous saying related to this: “A Distance of thousand miles begin even with a single step”. Depending upon the nature of your business you as an entrepreneur need to remain optimistic and experience patience at every development stage and concentrate on doing the best to promote it.

6.     Overlooking Growth Opportunities

Asan entrepreneur you have to deeply research the market and available business opportunities. You must acquire adequate knowledge related to the needs of target group and your potential customers. You should also understand the aspect of price elasticity and regional boundaries associated to your business. Knowledge of your regional and global competitors is an important factor to plan well about your business growth.

7.     Lack of a Brand Development

It is very important to keep yourself concentrated and focused about the development of business related brand. If you will overlook the fact of brand development and keep on doing things to get the job done anyway, it will have negative impact over your business in long run. Brand development helps your potential customers to know your services or goods and what to expect from you while doing business.

8.     Lack of Knowledge about Customer-Base

A very important factor related to the entrepreneurship is to know the nature of your customer base. You should know all the needs of your potential customers thoroughly and find out best methods to address them in an efficient manner. You must have the ability to customize products as per the needs of customers and a very good way to obtain this important knowledge related to the customers is by getting periodic feedback from them. The customer feedback can be used as main factor of policy making related to product development or service offered and improving its quality.

9.     Lack of Execution and Practicality

Sometimes proper business planning becomes useless when there is lack of execution. As an entrepreneur your business planning needs to be followed with adequate and intelligent execution plan. Bight and productive business ideas should be implemented immediately by remaining within the available financial, operational and personal limits.

10.  Unrealistic Forecasting and Projections

As an entrepreneur you must restrict yourself on the realistic statistics, business projections and forecasting. Ideal form of business approach and strategy can be thought out which needs to be translated into real time productivity. You also need to keep in mind all the downside scenarios and always try to remain within your financial limits as discussed in the Reason 10. Try to remain within your personal and operational limits. SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis is a very good way to analyze your business position.

11.  Over budgeting

Budgeting is an important feature before starting any business related activity. The budget should be made by keeping in view all the down and upside scenarios. You should focus on making a bi-yearly or yearly budget depending upon the nature of your business. The budget must be realistic and it should lack with all possible aspects of over budgeting.

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MAURITUS – FREEPORT

The Freeport operates as a customs-free zone for all goods destined for re-export.

The aim was to set up a commercial free zone to encourage the import and re-export of goods through a logistics and distribution platform in Mauritius. The targeted markets are the Indian Ocean islands and countries in East Africa.

Freeport activities include warehousing, breaking bulk, minor processing, and reshipment, amongst others. Approximately 70,000 square metres of warehousing space, including cold rooms (8,000 square metres), and processing centres (6,000 square metres), are available at the port and airport. The Freeport has conceived an e-business platform to support, assist and facilitate start-up and deployment of e-commerce ventures.

More info

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