MAURITIUS: An Introduction
Strategically located in the Indian Ocean at the crossroads of international investments, Mauritius has seen remarkable and unprecedented growth throughout the last decade and remains one of the most attractive international financial centres. Leveraging on the recent establishment of the African Continental Free Trade Area, state-of-the-art infrastructure, modern and innovative legal framework, and ease of doing business regime, Mauritius remains a hotspot for global investment and an attractive choice for global companies seeking a foothold in Africa and Asian markets.
Today, Mauritius continues to be one of the world’s fastest-growing economies according to the International Monetary Fund’s World Economic Outlook, October 2023, mainly capitalising on its beacon of political, social and economic stability, a harmonised tax environment and its conducive and sophisticated international financial centre of substance.
Economic Overview
Mauritius is poised to fortify its presence as the jurisdiction of choice for fund managers and institutional investors seeking to invest in Africa and Asian markets. Mauritius positions itself as a risk mitigating platform and a treaty-based jurisdiction through its wide network of 29 investment promotion and protection agreements and 46 double taxation avoidance agreements currently concluded and which are in force. Mauritius prides itself on the absence of the foreign exchange control and withholding taxation to enable free repatriation of capital gains, profits and dividend distributions earned by foreign investors in Mauritius.
Taking into consideration the strong level of tourists in 2024, the projected real GDP in Mauritius for 2025 is 4%, according to the International Monetary Fund.
Legal Framework
Mauritius has an unconventional hybrid system of legal jurisprudence, combining both the French Napoleon Code with a strong overlay of the colonial English Common Law. The Supreme Court is the superior court of the island, having unlimited jurisdiction to hear and determine any civil or criminal proceedings under any law other than a disciplinary law, and such jurisdiction and powers as may be conferred upon it by the Constitution or any other law. Mauritius has, after acceding to the status of Republic, retained its final right of judicial recourse to the Judicial Committee of the Privy Council of the United Kingdom, which remains the highest appellate court of the country.
Interestingly, arbitration has grown out of the need to settle disputes in an efficient and specialised manner, as an alternative to litigation in Mauritius, through the International Arbitration Act 2008. The importance of this mechanism flows from its components of confidentiality, efficiency in terms of time and cost and expeditiousness, showcasing itself as a blooming option for investors on the international scale.
With the recent change in government in November 2024, several changes will be initiated by the current government, aiming for efficient economic development, including but not limited to (i) the setting up of the national crime agency which will replace the Financial Crimes Commission, which will be better equipped to deal more effectively with financial and other serious crimes, (ii) implementing a strong investment-driven strategy which will comprise of facilitating a triangular partnership to position Mauritius as a hub for manufacturing and re-exportation, (iii) transforming Mauritius into a Hi-Tech Intelligent Island, (iv) development of the blue economy and (v) green investments, amongst others.
Latest Developments in Mauritius
Climate and sustainability fund
The government has introduced the corporate climate responsibility levy payable by corporations (with a turnover of not less than MUR50 million) which is equivalent to 2% of their profits. This fund shall be used to support national initiatives to protect and manage the impact of climate change in Mauritius.
Enhanced employment welfare
Increase in minimum wage
There has been an increase in the minimum wage from MUR16,500 to MUR17,110. Consequently, the government has implemented wage relativity for employees with a monthly basic salary of up to MUR50,000 to adjust salaries.
Leaves and allowances
There has been an increase in maternity leave from 14 to 16 weeks and paternity leave from one to four weeks. A maternity allowance of MUR2,000 per month for nine months has also been introduced.
Child allowances have been raised from MUR2,000 to MUR2,500 per month and shall be payable until June 2025, and parents of children in private schools are allowed an income tax deduction of up to MUR60,000 per child during the year ending June 2025.
Recruitment of migrant workers
The employment of migrant workers can now be done through agencies which appoint and supply migrant workers to businesses around the island. These agencies, named labour contractors, have to be registered with the Ministry of Labour. This means less administrative work for companies in need of migrant workers.
Prejudiced shareholders in global business sector
The Companies’ Act 2001 allows shareholders, former shareholders and other entitled persons to apply to court if the company has been acting in an unfair/discriminatory manner. This right was not extended to global business corporations. The Finance Act 2004 has now extended this possibility to global business corporations where their constitution provides for these provisions.
Freeport activities
Global business companies can now hold freeport certificates which would allow them to conduct activities under the Freeport Act 2004 (which includes shipbuilding, repairs and maintenance of ships, aircraft and heavy-duty equipment, storage, maintenance, and repair of empty containers, amongst others).
Holding property without Prime Minister’s Office’s consent
Previously, non-citizens did not require Prime Minister’s Office’s approval to hold property by way of a non-renewable lease agreement for industrial or commercial purposes for up to 20 years. This has been extended to up to 30 years.
The above recent legal and regulatory developments in Mauritius offer a more organised and appealing business environment from the standpoint of investment. Mauritius’s standing as a competitive environment for foreign investors is strengthened by the expansion of Freeport advantages to global business corporations and improved legal protections for shareholders. These help position Mauritius as a gateway for future investments.