Mauritius: Offshore Legal and Tax Regimes
Tax Treatment of Offshore Operations
See Domestic Corporate Taxation for the general principles of Mauritian corporate taxation, which also apply to offshore entities when they pay tax. Also see Withholding Taxes for a simplified description of the rather arbitrary Mauritian withholding tax regime.
A GBC1 (old Offshore Company) pays corporate income tax at 15% (0% if it was incorporated before 1st July 1998).
GBC1 Companies are also exempt from stamp duty, land transfer tax, and capital gains (morcellement) tax. The expatriate staff of offshore companies pay half the normal rate of personal income tax; two of them per company can import cars and household equipment free of customs duty.
There are no withholding taxes or equivalent deductions on dividends or other payments made by GBC1 companies to non-resident shareholders (residents aren't normally allowed to hold the shares of such companies).
GBC1 Companies are regarded as being resident, and are therefore able to take advantage of Mauritian Double Tax Treaties. The tax treaty with India is particularly favourable, and Mauritius is a favoured location for holding companies for those trading with or investing in India.
GBC1 Companies can also utilise the unilateral foreign tax credit which is 80% of the Mauritian tax rate (leaving a residual liability of 20% of the Mauritian tax rate = 3%); the credit used to be at the rate of 90% and it is possible that there will be further reductions.
Offshore Banking Units (since abolished), Captive Insurers and Offshore Investment Funds, all of which have the GBC1 Company as their basis, are taxed as for GBC1 Companies in general. The same applies to GBC1 Companies holding ships on the Mauritian Open Registry (this is the mandatory structure), but additionally, earnings from shipping operations are exempt from tax, the crew of the ships are exempt from payroll taxes, and materials, fuel, equipment etc for the ship are all free of customs and excise duties.
A GBC2, - officially an exempt-status GBC1 Company - has the same tax benefits as a GBC1 Company; however, it is considered as non-resident, and cannot make use of Mauritian Double Tax Treaties.
The Limited Life Company Offshore Company can be based on either a GBC1 or GBC2 Company, and will have equivalent treatment from a tax point of view.
Both General Partnerships and Limited Partnerships can acquire offshore status under the Code de Commerce Amendment Act 1995; and under the Finance Act 1996 they are given access to Mauritian Double Tax Treaties. Offshore partnerships would normally have non-resident partners, and they are treated as companies for tax purposes, in a way that is analogous to the treatment of GBC1 and GBC2 Companies (see above).
Offshore trusts are taxed in the same way as GBC1 and GBC2 Companies, see above. However, chargeable income is defined as the difference between (a) the net income derived by the trust; and (b) the aggregate amount distributed to the beneficiaries under the terms of the trust deed. Moreover, any amount distributed to non-resident beneficiaries is exempt from Income Tax.
An offshore trust is allowed a credit for foreign tax on its foreign-source income. If no written evidence is presented to the Mauritius Commissioner of Income Tax showing the amount of foreign tax charged, the amount of foreign tax shall nevertheless be conclusively presumed to be equal to 80 per cent of the Mauritius tax chargeable with respect to that income.
An offshore trust may opt by written notice to the Mauritius Commissioner of Income Tax to be treated as non-resident in Mauritius for tax purposes, in which case it will not be subject to any income tax in Mauritius. However, being non resident, the offshore trust may not benefit from Mauritius' extensive network of double taxation agreements.