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MAURITIUS: An Introduction

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MAURITIUS: An Introduction 


Mauritius has one of the most stable and business-friendly environments in the world. The attractiveness of Mauritius as an International Financial Centre is due to several factors, including a robust regulatory framework, harmonised tax environment, a bilingual and skilled workforce, political stability, economic diversity, an ideal time zone, a strategic geographical location and compliance with international standards. The Economic and Financial Affairs Committee of the European Union (EU) has, on the 10th October 2019, confirmed that Mauritius is fully compliant with all commitments on tax cooperation and EU tax good governance principles.


Mauritius has maintained its leading position as the most free economy in Sub-Saharan Africa and is ranked 25th out of 180 countries with an economic freedom score of 73.0 in the 2019 Index of Economic Freedom report published annually by The Heritage Foundation. Mauritius is considered an upper-middle income country, with a gross national income (GNI) per capita of USD 12,050 in 2018, according to the most recent World Bank Data, and aims to be in the high-income country category by 2025.

Mauritius remains among the Sub-Saharan Africa region’s most business-friendly countries, with solid economic policies and prudent banking practices. Its global trade and investment outreach has increased the export of goods and services and tourism, and low oil prices have kept inflation low.

Our real GDP has been increasing at an annual average rate of 3.7 percent since 2015 and is firmly on a rising trend. The growth rate was 3.8 percent in 2018 and is forecast to rise further to 3.9 percent in 2019 and 4.1 percent in 2020. The key economic objectives of the government for the upcoming year is on mainstreaming entrepreneurship in the country through extended support to Small and Medium Enterprises, encouraging investment in innovation and R&D and carrying out economic development in line with a sustainable and inclusive model.

On the infrastructure front, the first phase of the light rail project has been completed and the priority of the government remains in the modernisation of infrastructures across the country, including the building of new roads, the development of a new growth pole for the Mauritius Airport, and transformation of the port of Mauritius.

Legal Framework 

Mauritius has a hybrid legal system combining both civil and common law practices. It is governed by principles drawn from both the French Code Napoleon and English Common Law. The Supreme Court is the highest judicial authority in Mauritius and has unlimited jurisdiction to hear any criminal and civil proceedings. Mauritius has retained the Judicial Committee of the Privy Council of the United Kingdom as its final court of appeal.

Mauritius has also embraced arbitration as the new model of dispute settlement through the International Arbitration Act 2008, which is based on the UNCITRAL model and offers a tailor-made option for investors for a cheaper and faster out-of-court alternative to settle commercial disputes which would safeguard confidentiality. Mauritius is known as an international arbitration centre for the region.

Recent Legal Developments 

The following recent and key legal developments will impact doing business in Mauritius in 2020:

• Changes to the Companies Act

It is now mandatory for the board of directors of a public company to include at least one woman.

The maximum number of shareholders allowed by a private company has increased from 25 to 50.

• Changes to the Income Tax Act

- Tax Residency in Mauritius

The place of effective management has been removed as a criterion for determining tax residency of companies. A company incorporated in Mauritius shall be treated as non-resident if it is centrally managed and controlled outside Mauritius.

- Introduction of Controlled Foreign Company (CFC) Rule

The CFC rule has been introduced as an additional anti-avoidance provision. Where a Mauritius tax-resident company carries on business through a CFC, and the Mauritius Revenue Authority considers that the non-distributed income of the CFC arises from non-genuine arrangements which have been put in place for the essential purpose of obtaining a tax benefit, that income will be deemed to form part of the chargeable income of the resident company.

An arrangement, or a series of such arrangements, will be regarded as non-genuine if the CFC would not own the assets or would not have undertaken the risks which generate all, or part of, its income if it were not controlled by a company where the significant people functions, which are relevant to those assets and risks, are carried out and are instrumental in generating the controlled company’s income.

A CFC is defined as a company which is not resident in Mauritius and in which more than 50 per cent of its total participation rights are held directly or indirectly by the resident company or together with its associated enterprises and includes a permanent establishment of the resident company.

- Extension of the partial exemption regime

The 80 per cent partial exemption regime has been extended to cover the following income:

(i) interest derived by a person from money lent through a peer-to-peer lending platform;

(ii) income derived by a company from reinsurance and reinsurance brokering activities;

(iii) income derived by a company from leasing and provision of international fibre capacity; and

(iv) income derived by a company from the sale, financing arrangement, asset management of aircraft and its spare parts and aviation advisory services related thereto.

- Tax Holidays

Tax holidays have been introduced on the following income:

(i) Four year exemption on income derived by a company from bunkering of low sulphur heavy fuel oil;

(ii) Eight year exemption on income derived by a company from intellectual property assets developed in Mauritius on or after 10 June 2019;

(iii) Five year exemption on income derived by a company set up on or before 30 June 2025 and issued with an e-commerce certificate by the Economic Development Board;

(iv) Five year exemption on income derived from licensed operation of a peer-to-peer lending platform provided operation starts before 31 December 2020 and the person satisfies the condition relating to the substance of its activities as specified by the Financial Services Commission; and

(v) Eight year exemption on income derived by a company set-up on or after 10 June 2019 and engaged in the development of a marina.

• Changes to employment law

The Workers’ Rights Act 2019 came into force by proclamation in the Government Gazette on 24 October 2019. The provisions of the Act relating to “Portable Retirement Gratuity Fund”, however, will only come into effect on 1 January 2020. The Act repeals the Employment Rights Act 2008. Some of the major changes brought by the Act are in relation to the definition of worker, contract of determinate duration, end of year bonus, settlement agreement, wages guarantee fund, introduction of new leaves, promotion, disciplinary hearings, reduction of workforce and portable gratuity retirement fund.

Doing Business in Mauritius 

Doing business in Mauritius is both easy and smooth and complies with best practices in terms of transparency, good governance and ethics. Mauritius is ranked 13th out of 190 countries assessed according to the World Bank’s Doing Business Report 2020, progressing from 20th position in the 2019 Report. This represents the best ranking ever for Mauritius since the publication of the report in 2007. Mauritius further consolidates its lead position on the African continent as the best place for doing business.

Some of the key areas where Mauritius excelled are as follows: Dealing with construction permits, where Mauritius ranks 8th out of 190 countries; Paying taxes, where the country is ranked 5th with a score of 94% in the ease of paying taxes indicator, owing to the sustained reforms implemented by the Mauritius Revenue Authority; Registering a business/Incorporate a company online in less than two hours; Getting electricity - reduced costs and time for a new electricity connection; Registering property - Enhancement of the Mauritius e-Registry System (MERS) and streamlining of procedures; and, Improving the legal framework for resolving insolvency.

Mauritius also ranked 1st on the 2018 Mo Ibrahim Index of African Governance.

Mauritius has an attractive fiscal regime with a corporate tax rate of 15%. Companies qualifying as residents of Mauritius for tax purposes are entitled to a “partial exemption” regime of 80% on specified foreign source income. Companies engaged in the export of goods and freeport operators or private freeport developers engaged in the manufacture of goods are liable to tax at the rate of 3% on income from the sale of goods on the local market.

Regarding personal taxation, an individual having an annual net income not exceeding MUR 650,000 is subject to income tax at the rate of 10 % while an individual having an annual net income exceeding MUR 650,000 is subject to income tax at rate of 15%.

The country has so far concluded 46 tax treaties and is a party to 28 Investment Promotion and Protection Agreements which provide extra assurance and security for the country’s potential investors. The extensive and expanding network of these treaties confirms the genuineness of Mauritius as a tax-efficient jurisdiction for structuring investments.