What are the costs to consider when starting a business in Mauritius as a foreign investor?
Nestled in the Indian Ocean, at the crossroads of Africa and Asia, Mauritius is increasingly attractive to foreign investors from all over the world. Of course, investing in Mauritius, as in any country, requires proper budgeting. In this article, Blue Azurite gives you an overview of the key costs to consider when setting up and running a company in Mauritius as a foreigner. The main costs of starting a business in Mauritius Investment funds First and foremost, deciding on the type of business you want to set up in Mauritius and the sector is crucial. Depending on the company structure you have chosen, whether it’s a Private Limited Company (Ltd), a Public Limited Company (PLC), a Global Business License (GBL) Category 1 or 2, a Limited Life Company (LLC), a Limited Partnership (LP), a Trust, a Société (partnership), a Branch Office or a Representative Office, an initial investment amount might be required. It’s interesting to note that the government has set up a range of schemes for foreigners looking to invest in Mauritius. These include: Therefore, make sure to inquire about the investment requirement of your targeted scheme when planning your new entrepreneurial adventure in Mauritius. Incorporation costs Once you have decided on the type of business you intend to create in Mauritius, there will be incorporation costs to consider. These costs usually vary on the type of company, as mentioned above, the nature and the size of the business, as well as the amount of share capital invested and the complexity of the registration process. For example, some types of companies in Mauritius, such as a PLC, may involve fees for name reservation, registration, etc. Legal and regulatory compliance costs Starting a business in Mauritius, as anywhere else, might not be as straightforward as it seems, so it’s always recommended to seek the assistance of experts, such as Blue Azurite. These experts can help you understand local laws and regulations relating to your specific industry. Their mission is to ensure that your business is compliant with all statutory requirements, such as understanding and signing contracts, obtaining necessary permits, etc. Some sectors might require special permits and licenses, so you have to factor in additional costs. While all these costs might sound like a constraint to you, they are essential for your business to avoid any legal complications in the long run. Taxes and customs duties While Mauritius offers a range of tax incentives to foreign investors, you might have to pay certain taxes when starting a business in Mauritius. In fact, the Mauritian jurisdiction provides a very low corporate tax rate, and foreign investors might be eligible for tax exemptions in some cases. However, as a foreign investor, you need to consider other types of taxes, such as income tax, value-added tax (VAT), customs duties, and any other taxes that might be applied to your specific industry. On the plus side, it’s worth noting that Mauritius has signed double taxation avoidance treaties (DTA) with several countries. Infrastructure and utility costs Once you have started your business in Mauritius, you will need to factor in other costs, such as renting or building office space. In this regard, costs will depend not only on the type of infrastructure but also on the size, location and facilities available. Besides rent or mortgage payments and maintenance fees for your office space, additional costs like utilities (water, electricity, Internet, etc.) will add up. Depending on the type of company and activity, you will also have to invest in technology and other necessary infrastructure, such as IT systems, hardware, software licenses, etc. Employment costs Before getting started, you might need to hire local or local staff. While Mauritius has a highly skilled workforce, you will be faced not only with the cost of hiring, including salaries and employee benefits, such as health insurance, but also registration with the Contribution Sociale Généralisée (CSG) and the National Savings Fund (NSF). Add to that the cost of hiring foreign professionals, including Occupational Permit applications, depending on the nature of your business. Other costs involved in starting a business in Mauritius Besides the main costs mentioned above, you should also consider the following: Marketing and advertising costs: To build brand awareness and reach your target audience in a competitive market. This includes marketing campaigns, branding, digital marketing, public relations, etc. Insurance costs: Depending on the nature, size and location of your business and the type of activity you will be carrying out, you will probably need insurance policies covering property, liability, and other specific needs. Logistics costs: For businesses import and export businesses, the cost of transportation and logistics should be factored in, including shipping, customs clearance, warehousing and distribution. Training and development costs: To make sure you’re surrounded by the right professionals, you might want to invest in training programs, workshops, and other skill development initiatives for your employees. Where to get help Starting a new business venture in Mauritius can be a rewarding experience for foreign investors, although this involves certain costs. The key to overcoming these challenges is to work with experts. Blue Azurite is here to assist you, from deciding on the type of business you want to create to accompanying you on every step until you are fully operational and beyond. Contact us now for guidance on how to get started.
Budget 2021: Fiscal measures advantageous for firms operating in Mauritius
In the wake of the coronavirus pandemic, the government of Mauritius has been introducing several measures to boost the economy of the country and to attract firms wishing to establish themselves in the island. The fiscal measures introduced during the 2021 contained three key announcements which would make Mauritius a more beneficial jurisdiction to conduct business in for certain types of firms. Tax exemptions on the Investment Dealer Licence The government has extended the 80% partial tax exemption on specified income streams to companies holding an Investment Dealer Licence. What is this? According to the Securities Act 2005 and the Securities Licensing Rules 2007, this licence can be given to brokerage houses around the world so that they can set up Investment Dealer Companies in the country. Firms can obtain three types of investment dealer licences. Let’s have a look at them and at the operations that can be carried out. Investment dealer (full service)Holders of this type of licence act as intermediaries for their clients. This means that they can execute securities transactions for them. These involve trading securities as a principal to later on resell them to the public and underwrite or distribute securities on behalf of an issuer or a holder of securities. They can even manage portfolios of clients and give investment advice related to the firm’s activities. Investment dealer (broker)This type of licence allows you to manage clients’ portfolios and to execute orders for them. You can also give advice on securities transactions to clients through printed materials or any other means. Investment dealer (discount broker)Holders of this licence only execute orders for clients without giving advice. To obtain an investment licence, applicants must have the minimum stated unimpaired capital for the relevant category as advanced by the Securities Act and meet the required substance requirements, if and as required. Moreover, the applicant must establish the necessary procedures to prevent conflicts of interests and should appoint a Money Laundering Reporting Officer (MLRO) & an Alternate Money Laundering Reporting Officer (Alternate MLRO). Additionally, all staff members must meet ‘Fit & Proper’ Requirements. Now, thanks to the 80% partial tax exemption, the effective income tax applicable to holders of the licence is only 3%. The Investment Dealer licence was already in high demand since holders could trade on behalf of clients and following the announcement, conducting such operations in Mauritius is even more beneficial. Tax holiday for Family Offices and Fund and Asset Managers The 2021 budget announced that the tax holiday available for Family Offices (FOs) established in Mauritius and for Fund and Asset Managers will be doubled from five to ten years. Moreover, a Family Office is no longer required to hold a Global Business Licence (GBL). What are Family Offices? These are entities that are set up by HNWIs, or UHNWIs to offer a family several financial services, such as wealth management, concierge, management of philanthropic activities, accounting and tax etc. Someone with enough experience in the financial field, or any relevant one, as deemed appropriate by the FSC, must apply for a Family Office Licence. It should be noted that these entities cannot have clients other than “family clients”; persons connected to individuals within the entity. The relationships established may be by blood, marriage or adoption. The value and investments of each family must be more than USD 5 million. This refers to the minimum asset base of the Family. Moreover, each family office must appoint a Money Laundering Reporting Officer (MLRO) and Deputy Money Laundering Reporting Officer(DMLRO) duly approved by the financial services commission(“FSC”). The change announced in the budget is a welcome one since the Family Office structure has been impaired by the extent of the licensing and regulatory requirements in Mauritius in comparison to other jurisdictions. Protected Cell Companies- extension of activities In the budget speech, it was announced that the activities undertaken by Protected Cell Companies will be extended. A PCC is a vehicle that authorises the lawful separation of assets owned by each cell of the company. Each cell is isolated from one another and they operate separately. What are some activities that Protected Cell Companies undertake? asset holding, structured finance business, collective investment schemes and closed-end funds, insurance business and external pension schemes. While the budget did not specify what types of activities will be added to their operations, it is expected that they will add more utility to the structure.
Mauritius Personal Tax: Solidarity Levy
There has been some major changes brought to the personal taxation in Mauritius, as announced in the 2020-2021 budget for Mauritius. Amongst others, the solidarity levy was reviewed and meant to be applicable to Mauritian residents. Reduced threshold for the applicability of the solidarity levy As from the income year 2020-2021, the threshold for the applicability of the solidarity levy is being lowered from MUR 3.5m to MUR 3.0m of the leviable income of Mauritius tax-resident individuals. The leviable income of a taxpayer consists not only of the chargeable income and also includes any Mauritius sourced dividend income including the share of the dividend of an individual in a resident partnership or succession. Increase in the standard rate of the solidarity levy As from the income year 2020-2021, the standard rate of the solidarity levy surges fivefold from 5% to 25%. The solidarity levy payable is however restricted to a maximum of 10% of the total of net income and dividend income. Taxpayers deriving emoluments The solidarity levy is collected under Pay As You Earn where monthly emoluments exceed MUR 230,769 in the income year 2020-2021. For employees not submitting an Employee Declaration Form, the rate of deduction is 25% of the amount above MUR 230,769, limited to 10% of total emoluments. Their payroll system would need to be adjusted accordingly. Tax-residence in Mauritius The solidarity levy is only payable by tax-resident individuals who derive leviable income above the prescribed threshold. Individuals are considered tax resident in Mauritius if they meet any of the following conditions: They are domiciled in Mauritius, unless their permanent place of abode is outside Mauritius. They are present in Mauritius for a total of at least 270 days during the current tax year and the two preceding tax years. They are present in Mauritius for at least 183 days during the tax year.
