In the past few years, Mauritius has positioned itself as a leading jurisdiction for setting up investment funds and businesses in the African and Indian Ocean region. Though it is primarily known for its favourable tax regime, other factors make Mauritius an attractive country to domicile funds.  

This article provides an overview of the key attributes that Mauritius offers as a global fund domiciliation centre. Additionally, this article will highlight the necessary requirements for setting up a fund in Mauritius. 

Why set up a fund in Mauritius?

Mauritius is an attractive location for fund managers and investors to structure international investments. This is largely due to their: 

Advantageous tax system 

As previously mentioned, a leading aspect of Mauritius’ allure as a fund domiciliation centre is its favourable tax regime.  

Mauritius holds a competitive position regarding the taxes imposed on investments compared to other countries in the African region. Mauritius investment funds are subject to a tax rate of 15 per cent on their net chargeable income. Moreover, the government does not impose withholding taxes on dividends, capital gains and interest in Mauritius.  

Since 1 January 2019, funds structured with a Global Business Corporation (GBC) Licence are entitled to treaty benefits alongside the partial 80 per cent tax exemption (with the provision of necessary substance requirements), resulting in a maximum effective tax rate of 3 per cent.    

Valuable international relations 

Aside from the country’s 45 DTAs, Mauritius has signed Investment Promotion and Protection Agreements (IPPAs) with 29 countries and awaits ratification with 15 other countries in Asia and EMEA as of 2022.   

IPPAs promote and protect investments by reducing possible risks concerning nationalisation or expropriation in the participating countries. Moreover, it creates access to a broader market of millions of consumers in other regions. An IPPA can benefit investors through the following:  

• Free repatriation of investment capital and returns  
• Guarantee against expropriation  
• Most favoured nation rule for the treatment of investment  
• Compensation for losses in the case of war, armed conflict or riot  
• Arrangements for the settlement of disputes between investors and the contracting states  

Please read our previous blog for a detailed discussion on Mauritius’ double taxation avoidance (DTA) agreements with other African countries. 

Sound political and social environment 

The Republic of Mauritius maintains a stable political and social environment, making it a conducive jurisdiction for foreign fund investments. The World Bank’s 2020 “Ease of Doing Business” report ranked Mauritius first in Africa and 13th globally out of 190 countries. In addition, according to the Global Peace and Democracy Index of 2022, Mauritius ranked first and as the most peaceful country in Sub-Saharan Africa. 

The Bertelsmann Transformation Index (“BTI”) described the country’s political strategies to have a notable continuity with priority on a long-term perspective. In addition, it noted that the government has exhibited its “strategic capacity to prioritise and organise policy measures without putting off domestic and international partners.”  

Secure legal and regulatory frameworks 

Mauritius’ regulatory frameworks effectively facilitate fund set-up, management and administration.    

For instance, the European Commission confirmed that Mauritius is no longer included in the “high-risk third countries” list since 7 January 2022, thanks to government measures addressing its anti-money laundering and combating the financing of terrorism (AML/CFT) deficiencies and enhancing its AML/CFT framework. Mauritius’ Financial Services Commission recently updated its Mauritius’ AML/CFT handbook in September 2022.  

What are the types of funds and legal structures available?

Based on the Mauritius Securities Act 2005, the two main fund options available in Mauritius are:  

1. closed-ended fund; and  

2. collective investment scheme (CIS) or open-ended fund  

The main differences between the two abovementioned funds are that a closed-ended fund is:  

1. Subject to fewer regulations 

2. It can only issue a fixed number of shares 

3. Its shareholders cannot redeem their interests 

Four types of funds are under a CIS – a fully regulated CIS, a professional fund, a specialised fund and an expert fund. The illustration below shows a summary of the key features of each fund: 

	Fully regulated CIS	Professional fund	Specialised fund	Expert fund
Types of investors	Any	Shares are only available to sophisticated investors (e.g., government or public agencies and banks) or offered through private placement	Any	Generally restricted to expert or sophisticated investors
Types of investments	Any	Any	Investments in high risk or illiquid asset types, such as:  – real estate  – derivatives  – commodities or  – any other product authorised by the Financial Services Commission	Any
Minimum investment	No minimum investment	No minimum investment	No minimum investment	USD 100,000
CIS Manager	Does not have to be a resident in Mauritius but will be subject to more stringent regulation.	Does not need to be resident in Mauritius.   Will not be subject to most of the CIS regulations if the shares are unlisted and not sold to the public.	Conditions will apply on a case-by-case basis.	Does not have to be a resident in Mauritius but will be subject to more stringent regulation.
CIS Administrator	Must be a resident in Mauritius	Must be a resident in Mauritius	Must be a resident in Mauritius	Must be a resident in Mauritius
Relevant Regulation	CIS Regulation	CIS Regulations – Regulation 75	CIS Regulations – Regulation 77	CIS Regulations – Regulation 78

On another note, the funds mentioned above can generally be structured as the following:  

1. Company or a GBC. A GBC may be locally incorporated or as a branch of a foreign company. It can engage in qualified global business activities such as asset and fund management, ICT services and consultancy, to name a few. As mentioned above, GBC benefits from Mauritius’ vast network of DTAs, making it a cost-effective structure for international tax planning.  

2. Partnership. A limited partnership (“LP”) is a commonly used vehicle for setting up Mauritius funds. A key feature of an LP is it can elect to be either tax transparent (i.e., partners would be personally taxed) or opaque (i.e., taxed at the partnership level).   

3. Trust. Unit trusts are governed under the Mauritius Trusts Act 2001 and used for the long-term management, preservation and transmission of wealth and assets. Trusts in Mauritius can be life interest, discretionary and employee benefit trusts, to name a few.  

4. Protected Cell Company (PCC). A PCC is a corporate structure that is limited by shares, consisting of a core (“non-cellular”) and a portion of cellular cells that are isolated and operating separately. This, therefore, allows for the segregation of the risks, assets and liabilities of the individuals or corporate entities under a shared structure.  

5. Variable Capital Company (VCC). A VCC is a company incorporated under the Companies Act of Mauritius and governed under the Variable Capital Companies Act 2022, passed on 12 April 2022. A VCC carries out its activities through its sub-funds and Special Purpose Vehicles (“SPVs”). The Mauritius Minister of Finance expressed the need to supplement the competitiveness of the Mauritian financial services sector, introducing VCCs as a part of such efforts. VCCs provide more flexibility and efficiency by using a single entity for the management and operations of a fund.  

General requirements in Mauritius fund set-up

Before setting up a fund in Mauritius, a fund must be authorised by the Financial Services Commission. Application for authorisation requires the following:  

• Proposed fund prospectus;  
• Private placement memorandum; 
• Fund agreements (i.e., investment management, custodian and administration agreement); and  
• Draft constitutive documents 

These include information on the fund’s structure, objectives, target investors/market, KYC documents on the beneficial owners and proposed fund directors, among others. Aside from this, there would be processing and annual fees with amounts depending on the type of fund.  

Fund administrators and corporate service providers, like Bolder Group, can assist in accomplishing these requirements.  

Set up funds in Mauritius with Bolder Group

A successful fund set-up can be ensured when working with a team of experienced professionals. With an active presence in Mauritius, Bolder Group can assist from the fund domiciliation to administration.   

Our bespoke fund solutions include fund formation, fund accounting, periodic NAV calculation, investor services, reporting services, and incorporation services, among others.   

Interested in setting up a fund in Mauritius? Contact us at info@boldergroup.com or our Mauritius office.