Planning to set up a business in Mauritius? Here’s an overview
Classified by the World Bank as an upper-middle-income economy and the wealthiest African country per capita, Mauritius is one of Africa’s financial centres. The island nation of 1.2 million people ranks first in terms of ease of doing business in Africa, making it an attractive jurisdiction to set up a business, largely as a result of it being one of the most politically and economically stable countries in the region.
Mauritius has various laws in place ensuring a business-friendly environment, including:
- the Companies Act of 2001, which provides for the different business structures available in Mauritius
- the Business Registration Act 2002
- the Financial Services Act 2007; and
- the Business Facilitation Act of 2019, which “provide[s] for the simplification and harmonisation of the process for the application for permits and licences with a view to further facilitating enterprises in the context of ease of doing business”.
Should you set up a business in Mauritius? Here are some reasons you should consider doing so if you plan to penetrate the African market in the future:
- As mentioned above, Mauritius is the leading financial and economic hub in Africa, topping other countries in the continent in terms of global competitiveness, the global index for the economic value of peace ad the index of economic freedom, amongst others. These factors give the country a major advantage in terms of international trade with countries in the region.
- The country’s workforce is highly educated and highly qualified. Many of the members of the Mauritius workforce are multilingual, speaking several languages including English and French, which presents opportunities for international services.
- Due to its strategic geographic location, Mauritius can be considered a gateway to international markets, specifically Africa, a region with growing economies and about 1.2 billion consumers.
- Mauritius has a very competitive tax climate, which makes it attractive to investors and businesses to set up a company. Dividends and inheritance are tax-free. In some cases, the 15 per cent value-added tax can be refunded. The corporate and personal tax rate is 15 per cent with exemptions available to reduce corporate income tax to 3 per cent in certain cases.
Business structures to set up in Mauritius
- Companies – these are the most commonly used structures in Mauritius. According to the Companies Act of 2001, companies can be any of the following categories:
- Domestic company
- Global business company
- Authorised company
In terms of liability, companies can be:
- Limited by shares
- Limited by guarantee
- Limited by shares and guarantee
- Unlimited Company
- One-person company
- Dormant company
Companies can also be either private (no more than 50 shareholders) or public (can offer shares to the public and may have more than 25 shareholders)
- Partnerships – this structure allows for more than two or more partners in an entity, with the partnership agreement limited to a maximum of 99 years. After this, the agreement can be renewed, extended or dissolved.
- Limited partnerships – the Limited Partnerships Act of 2011 governs this entity, where at least one general partner or one limited partner should be situated in Mauritius.
- Foundations – these can be set up mostly for charitable purposes for the benefit of individuals or organisations.
Setting up a company in Mauritius versus South Africa
For a number of reasons, Mauritius has a competitive advantage over South Africa in terms of setting up a business in international locations. For example, the island nation has an excellent network of bilateral tax treaties with many countries in the region.
The benefits of using an international location to house your company and/or trust as a risk mitigation tool against political and economic risks can be illustrated through an example of a comparison between Mauritius and South Africa.
- Mauritius is the top-ranking African country in the World Bank Group’s Ease of Doing Business report and is ranked 13th globally. South Africa is ranked number 84 globally.
- Mauritius is also ranked as the top African country in the Economic Value of Peace Report (1st in Africa and 15th in the world) whereas South Africa ranks among the bottom 21 countries in the world.
- Mauritius was placed as the top-ranking African country in the Democracy Index 2020 (1st in Africa and 1920th in the world) whereas South Africa ranks 39th in the world.
The table below is an example of the differences between Mauritius and South Africa in a number of different financial elements:
|Exchange control regulations in place||No||Yes|
|Personal income tax rate||15% (a solidarity tax is leviable on income above MUR 3 million)||18% to 45% depending on the level of income|
|Capital gains tax for companies||Calculated as part of the company’s profits at a maximum rate of 15%||22.40%|
|Capital gains tax for individuals||None||Depending on the level of income and linked to the personal tax rate|
|Dividends withholding tax||None (but can be subject to the solidarity tax under certain conditions)||20.00%|
|Effective corporate tax rate on investment business||3%||28%|
|Donations tax||None||20% on donations between R100,000 and R35 million and 25% on donations above R35 million|
|Inheritance tax||None||20% estate duty|
*Please note that this should not be construed as financial or tax advice, the figures above are for illustrative purposes only.
Bolder presence in Mauritius
In February 2023, Bolder Group and Heimdall, a Mauritius-based trust and corporate services provider, started integrating the two entities, following Bolder’s acquisition of the Mauritius firm. This development has enabled Bolder to have easier access to African markets via Mauritius structures. At the same time, Mauritius clients looking to expand overseas and outside the African region can benefit from Bolder’s international reach.
Click this link for more information about the acquisition. If you intend to enter Mauritius or the African market, please contact us at email@example.com.