Global Business Companies

Category 1 Global Business Company
Category 2 Global Business Company
Protected Cell Company

Global Business Companies are regulated by the Mauritius Financial Services Commission. There are two main types of companies that may be offered to our international clients, namely a company holding Category One Global Business Licence (a “GBL1 company”) and a company holding a Category Two Global Business Licence (a “GBL2 company”). Global Business Company is a course for international taxation in Mauritius.

Both types of entities offer the highest degree of confidentiality and the choice between the two types will depend on a number of factors like the proposed activities of the company and the geographical area of operation. Global Business Companies can undertake activities ranging from investments to trading in various part of the world.

Our firm can assist in the formation and administration of both categories of companies. We also provide assistance to companies incorporated in other jurisdictions wishing to migrate their business to Mauritius by way of registration by continuation.

Taxation in Mauritius
General:

• Income tax is charged at a flat rate of 15% for corporates.
• There is no capital gains or inheritance tax in Mauritius.
• There is no withholding tax on the payment of dividends, interest or royalties by Mauritius companies.
• There is no stamp duty in Mauritius and no capital duty is levied on the issue of share capital.

Consequently, such payments may be made to a person located in another jurisdiction without any withholding tax being levied in Mauritius.

While a GBL2 company is not taxable in Mauritius, a GBL1 company is liable to tax on its income at a flat rate of 15%. However, a GBL1 company is entitled to a deemed foreign tax credit of 80% on its foreign source income. This effectively reduces the tax liability of a GBL1 company to a maximum of 3%. In other words, a GBL1 company is deemed to have paid 80% of the 15% tax liability on its foreign source income resulting in an effective maximum tax rate of 3%. Further, this resulting tax liability may be reduced to less than 3% and possibly nil depending on other allowable tax deductions.

• Category 1 Global Business Company (“GBL1”)

GBL1 company is resident for tax purposes in Mauritius and can thus avail itself of the benefits of the double taxation treaties signed by Mauritius. A GBL1 company can engage in almost any activity, including non-banking financial services, fund management, insurance, global headquarters administration or global treasury activities. These activities include the following:

• Aircraft financing and leasing
• Assets management
• Consultancy services
• Employment services
• Information and communication technologies
• Insurance
• Licensing and franchising
• Logistics and or marketing
• Operational headquarters
• Pension funds
• Shipping and Shipping Management
• Trading
• Any other activity as may be approved by the Mauritius Financial Services Commission

Taxation & Tax Situation

Taxation

• GBL1 companies are resident in Mauritius for tax purposes.
• There are no capital gains tax, and no withholding tax on payment of dividends, interests or royalties.
• No stamp duties or capital taxes.
• No inheritance tax.
• GBL1 companies are liable to taxes at the rate of 15%.

Tax Situation

• Provided that the GBL1 owns at least 5% of an underlying company, credit will be available on foreign tax paid on the income out of which the dividend was paid (x underlying foreign tax credit).
• When a company not resident in Mauritius, which pays a dividend, has itself received a dividend from another company not resident in Mauritius (a secondary dividend) of which it owns either directly or indirectly at least 5% of the share capital, such dividend will be allowable as foreign tax credit and an underlying foreign tax credit will also be available.
• Mauritius has no thin capitalization rules.
• Interest and royalty payments paid by GBL1 companies are tax exempt.
• Tax sparing credits are available. Under this regime the effective rate of taxation in Mauritius can be reduced, as a long stop provision exists whereby GBL1 companies may elect not to provide written evidence to the Commissioner of Income Tax showing the amount of foreign tax charged and enjoy a deemed taxation at 80% of the normal tax rate of 15%. Thus, the use of this long stop provision in isolation would reduce the effective rate of tax in Mauritius from 15% to 3%.

Tax Residency & Double Taxation Agreements

Tax Residency

A Global Business Category 1 Company wishing to benefit from the tax relief under the Double Taxation Agreements, requires a Tax Residence Certificate (TRC), which is issued by the Commissioner of Income Tax in Mauritius. To be tax resident, the company must demonstrate that “effective management and control” is in Mauritius. To satisfy this test the applicant company is required to:

• Have at least two resident directors in Mauritius.
• Chair and initiate Board Meetings from within Mauritius.
• Maintain an account with a local bank through which funds must flow.
• Maintain its registered office and all statutory records in Mauritius.
• Have a local qualified company secretary.
• Have a local auditor.

Investors should ensure that the above relevant conditions are also satisfied in the country of investment to guarantee eligibility of DTA benefits.

• Category 2 Global Business Company (“GBL2”)

A GBL2 company is a tax exempt entity and is mainly used for international business transactions, consultancy services or for private investment holdings where treaty benefits are not required.

A GBC2 is the perfect holding company often used as Special Purpose Vehicle internationally. It is user friendly and easy to incorporate. A GBC 2 is extremely flexible and is a suitable vehicle for holding and managing, private, trading and ship registration.

Activities that may be carried on by a Category 2 Global Business licencee include:

• Non financial consultancy
• IT Services
• Logistics
• Marketing
• Shipping
• Ship Management
• Trading non financial
• Passive Investment Holding
• One off transaction using a Special Purpose Vehicle
• Such other activity as may be approved by the FSC
• A GBL2 does not pay any tax on its world-wide income to the Mauritian Authorities.
• No withholding tax on dividends.
• No capital gains tax.

Taxation

The tax cost of a GBL2 is effectively the foreign tax suffered. A GBL2 can trade and/or invest in a GBL1 and vice versa. The GBC 2 may either be limited by shares or by guarantee or limited by shares and guarantee or simply unlimited. A GBC 2 may also be structured as a Limited Life Company.

Mobility

A non Mauritian domiciled company may change its domicile to Mauritius and continue as a GBC 2 provided re-domiciliation is permitted in the jurisdiction where the company is registered. In the same spirit a GBC 2 may be re-domiciled to another jurisdiction.

• Protected Cell Companies

Governed principally under the PCC Act 1999, the Financial Services Act 2007 and the Companies Act 2001, a PCC is a single corporate personality which may create one or more cells.

The feature unique to a PCC is the provision for its assets to be segregated into one or more self contained classes called “cells” for the purposes of separating and protecting individual cell assets from the threat of contamination by the failure of another cell.

The creation of a PCC does not create in respect of a cell, a legal personality separate from the company. The law allows a PCC to be set up for:

• Asset holding
• Structured financial business
• Collective Investment Scheme and Closed end Funds
• Specialized Collective Investment Schemes and Closed end Funds
• Insurance and Captive insurance business

Taxation of PCC

A PCC with a duly issued GBC1 licence, is taxable in the same way as a GBC1.