With the Foundations Act 2012, Mauritius added Foundations to its list of wealth management structures available to choose from. Well-known for its economic and political stability and dynamic business regime, setting up a Foundation in Mauritius provides many benefits. This article will highlight the features and basics of a Mauritius Foundation as well as the advantages, which the Mauritian jurisdiction offers.
What is a Foundation?
A Foundation is a legal entity that combines the features of a Trust and a Company. Its legal structure and functions are similar to those of a Trust, but is administered as a Company. Foundations are interesting to clients who may be unfamiliar with the concept of Trusts, particularly in civil law countries. The Mauritian Foundation can opt to have a legal identity thus having a certificate of registration and hold assets in its own name.
Foundations in Mauritius can be used for:
- Charitable causes;
- Estate and succession planning;
- Asset Protection;
- Wealth management;
- Asset holding;
- Tax planning;
- Pension schemes; and
- Housing intellectual property.
A Foundation is one of the preferred private structures used by High Net-Worth Individuals to cater for their succession and inheritance planning, private wealth management, limited liability status and asset-holding strategies. Setting up a Foundation in Mauritius, a reputable offshore jurisdiction, can provide numerous advantages to a Founder as well as Beneficiaries.
Why choose to set up a Foundation in Mauritius?
Mauritius is one of the best jurisdictions for corporate as well as personal structuring in Africa. Indeed, the country ranks 1st on the continent for ease of doing business, is an internationally compliant, cost-effective, and transparent jurisdiction.
A Foundation in Mauritius may apply for a Global Business Company licence if it wants to fall under the supervision of the Financial Services Commission (FSC) and become tax resident. It therefore has access to the wide network of Double Tax Agreements (DTA) and Investment Promotion and Protection Agreements (IPPA) Mauritius has with other countries. A Foundation may be used for:
- Charitable purposes, non-charitable (commercial) purposes, or both – many jurisdictions do not allow Foundations that have commercial objectives to operate; and
- The benefit of a person or a class of persons, to carry out a specific purpose, or both.
Mauritius Foundations are an alternative to Trusts and Private Trust Companies for High-Net-Worth clients willing to stay in charge of their assets while decreasing the annual cost of their structures. Foundations in Mauritius are not liable to tax in case:
The Founder is a non-resident and the Beneficiary is / Beneficiaries are non-resident
The advantages of setting up a Foundation in Mauritius include:
- Tax exemption:
if the Founder and all Beneficiaries are non-resident; or
- if the objective of the Foundation is being carried outside of Mauritius.
- is acquired by depositing a declaration of non-residence with the Director-General of the Mauritius Revenue Authority within three months of the expiry of the income year;
- Charitable Foundations are automatically tax exempted;
- Benefit from the network of DTA through tax-resident status;
- Foundations currently set up in other jurisdictions can re-domicile to Mauritius;
- A Mauritius Foundation can also re-domicile elsewhere;
- Members of the Foundation council are not liable to the Beneficiaries
A visual representative of the various parties’ involvement in a Foundation in Mauritius
A few key definitions
Council– Every Foundation require a Council. The Council allocates the assets of the Foundation and performs the tasks required. The Council has the power to delegate functions to officers it assigns, based on the Charter. The Council needs to have a minimum of one member who resides in Mauritius.
Charter– The Charter of a Mauritius Foundation is a set of rules and regulations that it has to abide by. It must contain information such as the name of the Foundation, its registered office, information relating to the Founder, Beneficiaries (if any), amongst others.
Founder– A Founder is a person who empowers a Foundation with its initial assets. However, an individual who endows assets in a Foundation after the latter’s registration does not declare that specific individual as the Founder unless otherwise stated by the Charter or Articles of the Foundation. A Founder can also be a Beneficiary and has no obligation to reside in Mauritius.
Beneficiary– A Foundation can have one or more individuals as Beneficiary, who is subjected to benefit from a Foundation. As such, the right to distribute any Foundation property may be effectuated on behalf of a Beneficiary.
Secretary– Every Foundation is required to have a Secretary. A Secretary can be a Management Company or an individual resident in Mauritius as per the rules of the FSC.
Articles– According to the provisions of the Charter, the Council can in a case to case basis have Articles relating to distribution of assets, identification of any initial or additional Beneficiaries, and how the Council provisions needs to be coordinated.
Protector– A Protector or a Committee of Protectors can be appointed by a Foundation conforming to the responsibilities, rights, functions and remuneration as may be declared in the Charter. The Charter should also highlight the relationship of Protector or Committee of Protectors with the Council whilst in office.