- November 29, 2021
- Posted by: audrey
- Category: Mauritius
In the wake of the coronavirus pandemic, the government of Mauritius has been introducing several measures to boost the economy of the country and to attract firms wishing to establish themselves in the island. The fiscal measures introduced during the 2021 contained three key announcements which would make Mauritius a more beneficial jurisdiction to conduct business in for certain types of firms.
Tax exemptions on the Investment Dealer Licence
The government has extended the 80% partial tax exemption on specified income streams to companies holding an Investment Dealer Licence.
What is this?
According to the Securities Act 2005 and the Securities Licensing Rules 2007, this licence can be given to brokerage houses around the world so that they can set up Investment Dealer Companies in the country. Firms can obtain three types of investment dealer licences. Let’s have a look at them and at the operations that can be carried out.
- Investment dealer (full service)
Holders of this type of licence act as intermediaries for their clients. This means that they can execute securities transactions for them. These involve trading securities as a principal to later on resell them to the public and underwrite or distribute securities on behalf of an issuer or a holder of securities. They can even manage portfolios of clients and give investment advice related to the firm’s activities.
- Investment dealer (broker)
This type of licence allows you to manage clients’ portfolios and to execute orders for them. You can also give advice on securities transactions to clients through printed materials or any other means.
- Investment dealer (discount broker)
Holders of this licence only execute orders for clients without giving advice.
To obtain an investment licence, applicants must have the minimum stated unimpaired capital for the relevant category as advanced by the Securities Act and meet the required substance requirements, if and as required. Moreover, the applicant must establish the necessary procedures to prevent conflicts of interests and should appoint a Money Laundering Reporting Officer (MLRO) & an Alternate Money Laundering Reporting Officer (Alternate MLRO). Additionally, all staff members must meet ‘Fit & Proper’ Requirements.
Now, thanks to the 80% partial tax exemption, the effective income tax applicable to holders of the licence is only 3%. The Investment Dealer licence was already in high demand since holders could trade on behalf of clients and following the announcement, conducting such operations in Mauritius is even more beneficial.
Tax holiday for Family Offices and Fund and Asset Managers
The 2021 budget announced that the tax holiday available for Family Offices (FOs) established in Mauritius and for Fund and Asset Managers will be doubled from five to ten years. Moreover, a Family Office is no longer required to hold a Global Business Licence (GBL).
What are Family Offices?
These are entities that are set up by HNWIs, or UHNWIs to offer a family several financial services, such as wealth management, concierge, management of philanthropic activities, accounting and tax etc. Someone with enough experience in the financial field, or any relevant one, as deemed appropriate by the FSC, must apply for a Family Office Licence.
It should be noted that these entities cannot have clients other than “family clients”; persons connected to individuals within the entity. The relationships established may be by blood, marriage or adoption.
The value and investments of each family must be more than USD 5 million. This refers to the minimum asset base of the Family. Moreover, each family office must appoint a Money Laundering Reporting Officer (MLRO) and Deputy Money Laundering Reporting Officer(DMLRO) duly approved by the financial services commission(“FSC”).
The change announced in the budget is a welcome one since the Family Office structure has been impaired by the extent of the licensing and regulatory requirements in Mauritius in comparison to other jurisdictions.
Protected Cell Companies- extension of activities
In the budget speech, it was announced that the activities undertaken by Protected Cell Companies will be extended.
A PCC is a vehicle that authorises the lawful separation of assets owned by each cell of the company. Each cell is isolated from one another and they operate separately. What are some activities that Protected Cell Companies undertake?
- asset holding,
- structured finance business,
- collective investment schemes and closed-end funds,
- insurance business and external pension schemes.
While the budget did not specify what types of activities will be added to their operations, it is expected that they will add more utility to the structure.