How to choose a business structure when investing in Mauritius
Thanks to its business-friendly policies and strategic location at the crossroads of Africa and Asia, not to mention its social and political stability and developing economy, Mauritius has become a top destination for investors looking for new opportunities overseas. If you’re also considering starting and growing your business in Mauritius, here are some essential tips for choosing the proper business structure according to your long-term objectives. The different types of business structures in Mauritius The Mauritian jurisdiction offers a wide range of business structures to choose from, each with its own set of benefits, depending on the type of business you are looking to create. While most processes are relatively straightforward, there are some factors you need to consider before getting started. Sole Proprietorship Sole Proprietorship is probably the most ideal type of business for entrepreneurs and small-scale investors looking to get a foot into the local market, especially due to its cost-effectiveness, with low capital requirements, and minimal paperwork. The major benefit of starting a Sole Proprietorship in Mauritius is that, as the sole owner of the business, you have complete control over its operations. Besides, this type of structure guarantees flexibility to the business owner to adapt their strategies and structures according to their needs. Other benefits of Sole Proprietorship companies are that owners retain all the profits generated by the business, which can be financially rewarding, and competitive tax rates, including tax holidays for certain types of businesses. Partnerships Partnerships are another advantageous form of business for foreign investors looking to collaborate with local companies or investors. Besides the ease of registering the business, Partnerships allow investors to share responsibilities and workloads, thus leveraging each partner’s expertise. Indeed, by collaborating with local partners, foreign investors can benefit from their knowledge of the local market and business landscape, as well as their networks and contacts. Another benefit of starting a Partnership in Mauritius is the sharing of risks and liabilities, which can considerably reduce the financial burden on foreign investors. Moreover, Partnerships allow the pooling of financial resources of various partners to grow the business or invest in new ventures. Regarding profits, they are shared among partners depending on their contributions and ownership of shares. Limited Liability Company (LLC) One of the greatest benefits of setting up a Limited Liability Company (LLC) in Mauritius is the limited liability protection for owners. In other words, the different shareholders’ personal assets are distinct from those of the company – which guarantees protection from debts and liabilities. Regarding losses, they are limited to each member’s capital contributions. Another benefit of LLC is its flexibility in ownership, making it a suitable option for both solo entrepreneurs and collaborators. Moreover, it is possible for foreign investors to own 100% of an LLC in Mauritius, while in the case of multi-member LLCs, members are allowed to define the terms and conditions through an operating agreement. Other than that, profits generated by an LLC are passed through the members and taxed as personal income. For foreign investors coming from countries having double taxation treaties with Mauritius, this also means access to competitive income tax rates. Private Limited Company The benefits of setting up a Private Limited Company (PLC) in Mauritius are many. First of all, the PLC guarantees liability protection to its shareholders. This means that each shareholder’s personal assets are separate from those of the company. Therefore, they are protected from debts and liabilities. Regarding shares, they are easily transferable, meaning that shareholders can easily join or quit the business. Besides being flexible, PLCs have greater access to funding, which makes it easier for business expansion and attract more investors. Among the tax advantages of starting a PLC in Mauritius, it’s worth noting that such companies may be entitled to zero capital gains tax and low corporate tax rates. Double taxation treaties may also help foreign investors pay lower tax rates on dividends, interests and royalties. Global Business License The Global Business Licence (GBL) has been specifically designed to attract foreign investors who can contribute to economic growth in Mauritius. Such businesses are usually involved in international trade, financial services and investment, and various other activities. One of the main benefits of setting up a GBL company in Mauritius is a streamlined process, especially considering the country’s investor-friendly regulatory framework. GBL companies are also a tax-efficient option for investors thanks to the extensive network of double taxation treaties, which can significantly reduce tax withholding in dividends, interests and royalties. Moreover, foreign investors can benefit from the absence of capital gains tax to maximize their profits. Another interesting fact about GBL companies is their ability to transact in multiple currencies. This can considerably facilitate international trade and investment. Last but not least, GBL companies can easily transfer profits and capital. Freeport Company A Freeport Company is the ideal structure for businesses involved in import and export activities. For instance, these companies are eligible for full exemption from customs duties and other taxes on activities such as import, storage and re-export of goods – which makes it a cost-efficient option. What’s more, Freeport companies are not limited to specific sectors. This means that they can engage in a wide range of activities, including manufacturing, processing, trading, assembly, distribution, etc. Setting up a Freeport Company in the Mauritius jurisdiction also means that foreign investors can benefit from 100% ownership. Besides, foreign investors can access regional and international markets through Mauritius, thus enjoying preferential trade agreements and many other regional initiatives. Another advantage is the efficient movement of funds, including capital and profits, for foreign investors. Overall, Mauritius provides not only a well-developed infrastructure and a business-friendly environment but also a stable economic environment with financial, tax and trade regulations meeting international standards. Where to get help While investing in Mauritius is a great idea, considering all the benefits provided by the different business structures mentioned above, it is essential to seek help to get your project started. BlueAzurite is here to help you! Our dedicated team
