Following the Mauritius Budget Speech 2018-2019, the Finance act was amended to abolish Global Business Category 1 and 2 (GBC1, GBC2) Licences. This is part of reforms undertaken by the government to increase the country’s competiveness and transparency as a global financial centre. Now, a non-resident of Mauritius wishing to establish a business in Mauritius must apply for a Global Business Licence.
What is a Global Business Licence?
The Global Business Licence (GBL) regime has been implemented to replace GBC1. It states that a resident corporation held or controlled by a person who is not a citizen of Mauritius and that is running or proposing to run one principally outside Mauritius will need to apply for a GBL. However, its issuance will depend on certain requirements. These are:
- The company’s core income-generating activities must be carried out in or from Mauritius,
- It is required to employ, directly or indirectly, a reasonable number of qualified persons to conduct its core activities,
- It should have a minimum level of expenditure which is proportionate to its level of activities,
- It must be managed and controlled in Mauritius and
- It should be administered by a management company.
Factors considered by the FSC
In line with provisions which have already been established, when determining management and control of a company, the Financial Services Commission (FSC) will take into consideration the following points:
- Will the GBL have a minimum of two directors who are residents of Mauritius and have enough capability to exercise independence of mind and judgement,
- Will the GBL maintain its principal bank account in Mauritius at all times,
- Will the GBL prepare statutory financial statements and will cause said financial statements to be audited in Mauritius and
- Will the GBL provide for meetings of directors to include at least two directors from Mauritius?
The assessments carried out by the FSC will depend on case-to-case basis and they will take into account the specific circumstances of each GBL.
Changes brought to the new tax regime
The introduction of GBL brought several changes to the country’s tax regime. Previously a GBC 1 was subject to a presumption that the amount of foreign tax charged on its foreign source income was equal to 80% of the Mauritius tax chargeable with respect to that income (‘Deemed Foreign Tax Credit’). This Deemed Foreign Tax Credit has now been abolished. In its place, a partial exemption regime has been implemented. The latter advocates that an income tax exemption of 80% on the following categories of income is applicable on the condition that the enhanced substance requirements are met.
- Foreign source dividend provided that it has not been allowed as a deduction in the source country,
- Foreign source interest income,
- Profit attributable to a permanent establishment which a resident company has in a foreign country,
- Income derived by a collective investment scheme (CIS), closed end fund, CIS manager, CIS administrator, investment adviser or asset manager and
- Income derived by companies engaged in ship and aircraft leasing.
Nonetheless, GBL companies can still claim credit for actual foreign tax incurred.
If you are looking for a management company that will help you set up a GBL in Mauritius, do not hesitate to get in touch with us.