Mauritius Business Environment Looking Up
The World Bank issued the Ease of Doing Business Index 2019. This year, Mauritius ranks at an all-time high at the 13th position globally and first among African countries.
For decades, authorities in Mauritius have strived to make the country an ideal destination to do business. Slowly but steadily, Mauritius has climbed the coveted list from 49th position in 2016 to 25th in 2017 and thereafter up to 20th position in 2018 and finally this year to 13th position. The measures used to create the list cover the following (individual ranking per measure for Mauritius indicated): starting a business (20th), dealing with construction permits (8th), getting electricity (28th), registering property (23rd), getting credit (67th), protecting minority investors (18th), paying taxes (5th), trading across borders (72nd), enforcing contracts (20th), and resolving insolvency (28th). Mauritius has ranked fairly well across most measures with the exception of getting credit and trading across borders.
The four areas where Mauritius has improved notably are:
- Dealing with construction permits
Mauritius has simplified its process of plan approvals for utilities and has reduced the time required to apply for a wastewater connection. This has positively impacted the overall time taken for obtaining a construction permit.
- Registering property
It is now easier to check for encumbrances thereby making property registration faster in Mauritius. Mauritius has improved the quality of its land administration system by publishing official service standards and court statistics on land disputes.
- Enforcing contracts
Publishing performance measurement reports for the commercial division of the Supreme Court of Mauritius has made enforcement of contracts easier.
- Resolving insolvency
Resolving insolvency is now easier following an improvement on the continuation of debtor’s business during insolvency proceedings.
The release of the index coincides nicely with the recently published list of non-cooperative jurisdictions for tax purposes issued by the European Union (EU) council. Mauritius does not feature on the list anymore having deemed to be a cooperative jurisdiction for tax purposes. This is a result of substantial changes made recently to ensure compliance to meet requirements set by the EU. Indeed, the new Finance Act adopted in July 2019 and the subsequent regulations issued in August 2019 have addressed perceived deficiencies in the Freeport Zone and Partial Exemption regimes. The Freeport Zone regime is no longer considered as preferential following the removal of “Companies in the Freeport zone” from Section 49 of the Income Tax Act. Simply put, Freeport Zone companies are no longer exempt from income tax.
The Mauritius Partial Tax Exempt Regime was created in 2018 to replace fiscal regulations on the regime of Global Business Licence that included Category 1 Global Business Company (GBC1) and Category 2 Global Business Company (GBC2). GBC1 companies would benefit from a deemed foreign tax credit of 80% lowering the effective tax rate to 3% or less depending on treaty benefits. GBC2 companies, on the other hand, were tax exempt in Mauritius. The Organisation for Economic Co-operation and Development (OECD) deemed such practice to be potentially harmful.
In an attempt to address the OECD’s concerns, the government has introduced the Partial Tax Exempt Regime. The new Regime provides for an 80% tax exemption on specified categories of income of Global Business Companies (GBC) in Mauritius. This is subject to some enhanced substance requirements regarding employment and minimum expenditure in Mauritius, being met. Furthermore, the GBC has replaced GBC1 companies. As for GBC2 companies, they have been replaced by Authorized Companies (AC). While AC’s are not considered to be tax resident in Mauritius, they are required to file a tax return in Mauritius.
Following the above changes, the OECD announced that Mauritius does not have any harmful tax practices in its regime. Pledges by the government to make Mauritius a business hub in the Indian Ocean and globally, backed by such positive outlook from international institutions reinforce the position of Mauritius as a jurisdiction of substance and repute. This makes Mauritius the ideal business platform to access different regions of growth particularly in Africa and Asia. Rogers Capital allows you to access all the advantages the Mauritius International Financial Centre has to offer to your business.
Madhvi Bokhoree – Head of Business Development
madhvi.bokhoree@rogerscapital.mu
Madhvi joined Rogers Capital Corporate Services in 2002. Today she heads the business development department. She has experience in a wide range of corporate services offered to international clients with an extensive expertise in business structuring & setting up, global business product development and compliance & onboarding client services.
Madhvi holds a BA (Hons) in Economics from Delhi University and a MA in Global Financial Services from University of Mauritius and is an associate of the Institute of Chartered Secretaries and Administrators.