The Mauritian Global Business Sector has undergone key transformations following the National Budget 2018-2019 and recommendations made by the OECD, in order to strengthen its position globally, with the addition of new substance requirements, the regime of Global Business Corporation, the phasing-out of Category 2 Global Business License ("GBC2") structures and the introduction of Authorised Company regime.
The key changes are as follows:
1.Global Business Licence
Existing GBC2 companies licenced on or before 16 Oct 2017, have been grandfathered until 30 June 2021. Licenses issued after 16 Oct 2017 were exempted till 31 December 2018.
2. Global Business Licence ("GBL")
The Category 1 Global Licence ("GBC1") has been renamed as GBL. As from 01 January 2019, the Deemed Foreign Tax Credit("DFTC") regime available to GBC1 is abolished and GBL companies will henceforth be taxed at a flat rate of 15%. A new tax regime has been introduced whereby an 80% exemption, the "partial exemption" shall be applicable to GBL. The partial exemption shall apply on the following instances foreign dividends, foreign interest, foreign permanent establishments, leasing of aircrafts and ships and the income of certain service providers.
3. Enhanced Substance Requirements
As per Section 71 (3) of the Financial Services Act 2018, a GBL shall at all times, carry out the core income generating activities in or from Mauritius by employing directly or indirectly a reasonable number of suitably qualified persons. It should have a minimum level of expenditure which is proportionate to its level of activities. The Financial Services Commission("FSC") has illustrated circular and guidelines with respect to the new requirement of substance.
4. Authorised Companies
Companies conducting business and having their place of effective management outside of Mauritius will have to duly apply for an authorisation from the FSC to be registered as an Authorised Company. The latter is treated as non-resident for tax purposes in Mauritius and is also required to file a return of income to the Mauritius Revenue Authority and the FSC within 6 months of its year end. The authorised companies shall have a Registered agent in Mauritius which should be a Management Company.
It is noted that these ongoing changes to the Global Business Sector tax in Mauritius are in line with the evolution and development of the Mauritian Financial Blueprint launched in Quarter 4-2018, as there is a need for greater transparency and substance requirements within jurisdiction, meeting to the full International standards and practices. Subsequently, we foresee that globally the substance requirements will be further enforced and the International Business will require more financial and legal expertise.