MAURITIUS: An Introduction

Introduction  

Mauritius has one of the most stable and business-friendly environments in the world. The attractiveness of Mauritius as an international financial centre revolves around numerous factors, such as a robust regulatory framework, a harmonised tax environment, a bilingual and skilled workforce, political stability, economic diversity, a strategic geographical location, and compliance with international standards. For instance, Mauritius is continuing to work towards becoming more integrated with the OECD.

Economy  

Mauritius continues to be one of the Sub-Saharan Africa region’s most business-friendly countries, with solid economic policies and prudent banking practices. Its global trade and investment outreach have increased exports of goods and services and tourism.

As reported by Statistics Mauritius, following two years of the COVID-19 pandemic, in 2023 the Mauritian economy is still subjected to uncertainties tied to global influences. In general, it is expected that the economic recovery from the pandemic will continue in 2023, albeit at a lower rate, considering the weak global economic growth. In light of this context and the past pre-pandemic trends and the policy measures announced in the budget 2022/2023, it is predicted that GDP at market prices is likely to grow by around 5% in 2023.

Legal Framework 

Mauritius has a hybrid legal system that combines both civil and common law practices. It is governed by principles drawn from both the French Napoleon Code 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 preferred model of dispute settlement through the International Arbitration Act 2008, which is based on the UNCITRAL model and offers an option for investors to adopt a more cost-efficient and faster out-of-court alternative for the settlement of commercial disputes, which would safeguard confidentiality. As a venue for hearings and meetings, Mauritius, which is located at the crossroads of Asia and Africa, is an excellent destination for international arbitration.

Doing Business in Mauritius 

Mauritius also ranked first on the 2020 Mo Ibrahim Index of African Governance and has an attractive fiscal regime with a corporate tax rate of 15%. Companies qualifying as residents for tax purposes are entitled to a “partial exemption” of 80% on specified streams of 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 derived from the sale of goods on the local market.

Regarding personal taxation, an individual with an annual net income not exceeding MUR700,000 is subject to income tax at the rate of 10%, while an individual whose annual net income is between MUR700,000 and MUR975,000 is subject to tax at 12.5% and an individual with an annual net income exceeding MUR975,000 is subject to income tax at the rate of 15%.

The country has concluded 45 tax treaties and is party to 29 Investment Promotion and Protection Agreements (and is awaiting ratification with another 15 countries), which provide extra assurance and security for potential investors. The extensive and expanding network of these treaties confirms the genuineness of Mauritius as a tax-efficient jurisdiction for structuring investments.

Recent Legal Developments 

The following recent, key legal developments have had an impact on doing business in Mauritius in 2022/2023.

Changes to the Companies Act 2001 (CA) 

The threshold of turnover that defines a small private company has been increased from less than MUR50 million to less than MUR100 million. In addition, a small private company that has an annual turnover not exceeding MUR100 million (previously MUR20 million) may file a financial summary with the Registrar of Companies (ROC) and will be exempted from filing its annual return, unless there is a change in its shareholding or in the composition of the board or any other particulars in relation thereto.

The time limits that were set during the COVID-19 pandemic have also been repealed. For instance, the time limit for calling an annual meeting has reverted to not later than six months after the balance sheet date or such other period as the ROC may determine. The obligation to prepare financial statements within six months or such other period as the ROC may determine has been reinstated, as has the registration of such financial statements with the ROC within 28 days after sign-off on the financial statements.

Changes to the Securities Act 

The Securities Act has been amended to clarify the obligations and function of an Official Exchange (ie, the Stock Exchange of Mauritius Ltd and Afrinex Ltd) to investigate market abuses, insider dealings and fraudulent behaviour by market participants and issuers on the Official Exchange. A new condition has also now been imposed: an audit firm CIS Manager or a collective investment scheme must be approved by the Financial Services Commission in Mauritius.

Changes to the Insurance Act 

Amongst other changes, the 2022/2023 budget introduced a framework for structured investment-linked insurance policies in the Insurance Act and to regulate the conduct of custodians in relation to such policies. Structured investment-linked insurance business has been added as a class of long-term insurance business under the First Schedule of the Insurance Act.

Changes to the Income Tax Act 

An eligible employer may benefit from a monthly allowance of up to MUR15,000 per eligible employee (prime à l’emploi) in respect of the basic salary paid to the eligible employee taking employment for the period of 1 July 2022 to 30 June 2023, provided that certain conditions are met, and limited to the first 10,000 eligible employees.

Global Minimum Tax: a Qualified Domestic Minimum Top-Up Tax will be introduced to companies resident in Mauritius forming part of multinational enterprise group having a global annual revenue of more than EUR750 million.

Tax deduction at source has been extended to cover consultancy services, security and cleaning services, pest management services and payment made by insurance companies to motor surveyors and mechanics for repairs of motor vehicles of policyholders.

Taxable income of Premium Visa Holder: the Act has been amended to provide that, where a person carries on business outside Mauritius and has an employee performing work remotely from Mauritius, any gross income attributable to the work performed by that employee in Mauritius will be classified as income derived by that foreign employer from Mauritius in that income year. However, this provision will not apply where the employee is a holder of a premium visa and the core business activities of the foreign employer are outside Mauritius.

Changes to the Non-Citizens (Property Restriction) Act 

This Act has been amended to include a new definition of “qualified entity” – ie, an entity that owns property and in which a non-citizen directly or indirectly owns or controls all interests in the property. The amendments also provide that no qualified entity shall be wound up without the express authorisation of the Minister of Internal Affairs.

Changes to the Registration Duty Act 

The Registration Duty Act has been amended to specify that a share buyback (ie, the acquisition by a company of its own shares) will be subject to registration duty and tax in the same manner as for a transfer of shares.

Another amendment is the introduction of an additional duty: regardless of the date on which it was drawn up, duty shall now be levied on any deed, witnessing the transfer of an immovable property to a non-citizen as may be approved under the Non-Citizens (Property Restriction) Act and where the value of the property is not less than USD350,000 or its equivalent or in such other amount as may be prescribed as follows:

(a) at the rate in force at the time of registration; and

(b) on the value, excluding VAT, of the property at the time of registration.

Changes to the Economic Development Board Act 

New schemes and their respective certificates have been introduced under this Act: the Integrated Modern Agricultural Morcellement Scheme; the Sustainable City Scheme; and the Transit Oriented Scheme. The new schemes are to be prescribed or specified in guidelines issued under the Act.

Changes to the Workers’ Rights Act 

- Definition of a “Worker” – a service provider who personally performs the same or similar work as a comparable worker in the same enterprise or industry is now included in the definition of a “Worker”, whether or not they hold a business registration number.

- Accumulation of 90 days sick leave – there is now no limit on the number of days of sick leave a worker can accumulate.

- Petrol allowance – any petrol allowance shall be at least 10% higher than the allowance paid in December 2021 but the monthly increase shall be a maximum of MUR2,000.

- Redundancy – where the reasons in support of the notification of the intended reduction of workforce are unjustified, the Redundancy Board shall make an order for the employer not to reduce the workforce or close down the enterprise.

- Portable Retirement Gratuity – regarding contributions for past services, in the case of a worker whose employment is terminated, an employer must pay such contributions as from the date of employment with the employer; in the case of a worker who has resigned, an employer must pay past contributions as from 1 January 2020, no later than one month after the date of termination of employment or the date of resignation of the worker.

Where a worker retires or dies, the employer must pay to a full-time worker or their heirs, as the case may be, a lump sum representing 15 days’ final remuneration for every 12-month period of employment instead of contributions for past services. A different formula applies to part-time workers.