Mauritius: Doing Business - JHI

Asia-Pacific RegionGLOBAL PRESENCE - LOCAL EXCELLENCEDoing Business inMauritiusJan 2010

GLOBAL PRESENCE - LOCAL EXCELLENCEDoing Business inMauritius2 Introduction2 About JHI3 JHI in Mauritius4 Key Facts6ContentsImmigration toMauritius8 Establishing aBusiness inMauritius9 Commercial &Residential Property10 Employment11 Taxation inMauritiusIntroductionThis guide is written for companies and individuals interested in doing businessin Mauritius. It outlines key facts and figures on Mauritius’s economy, businessinfrastructure, laws and taxation. This information contained herein is for guidanceonly and no responsibility for loss from action taken based on any material herein canbe accepted. It is recommended readers obtain further information and professionaladvice prior to making any decision.About JHIJHI is a flourishing worldwide network of approximately 130 member firms in 55countries. The largest association of its kind, JHI exists to enhance the ability ofmember firms and their clients to drive business locally and internationally through avariety of distinctive programs and services.Its members are respected leaders, offering a broad range of accounting, auditing andmanagement consultancy services in every business sector. They play key roles insetting the course for the profession. This extends to JHI members who serve in leadingpositions with worldwide bodies such as the Forum of Firms, an organization ofinternational firms that perform audits of financial statements that are, or may be, usedacross national borders. Potential new members are subject to a rigorous selectionprocess based on criteria including the quality of practice, reputation and geographicallocation.PAGE 2 | DOING BUSINESS IN MAURITIUS

GLOBAL PRESENCE - LOCAL EXCELLENCEDoing Business inMauritiusJHI inMauritiusNathadkhan Associates320 St James CourtSt Denis StreetPort LouisMauritiusTel:Fax:E-mail:Contact Partner:230-208 2377230-208 2378nkhan887@intnet.muNizam NathadkhanPAGE 3 |DOING BUSINESS IN MAURITIUS

GLOBAL PRESENCE - LOCAL EXCELLENCEDoing Business inMauritiusKeyFactsPopulation: 1.20 million(in 2008)consisting mainlyof people ofEuropean, Indian,African andChinese originCurrency: Mauritian Rupee(MUR)31 MUR = 1 $as at 30 Nov2009Time Zone: GMT + 4Dialling Code: +230Language:English is theOfficial businesswritten languageand French is thewidely spokenbusinesslanguage. Thelocal languagespoken by allMauritians isCreole (sort ofbroken French)Fiscal Year: Jan - DecBusiness Hours:The business hours are9:00 to 4:00 pm in the public sector;whilst the working hours in thefinancial services sector is8:30 am to 6:00 pmWorking week:Monday to SaturdayPublic Holidays:There are thirteen public holidaysMauritius is an island of 1865 square kilometerssituated in the centre of the Indian Ocean. The islandwas first visited by the Portugese at the beginning ofthe 16th century. The Dutch came in 1598 and namedthe island Mauritius in honour of their Prince, MauriceVan Nassau. In 1810 the British invaded the island.Mauritius remained a British colony until 1968. In1992, it became a Republic within the Commonwealth.Political ContextMauritius is a democratic state based on theWestminster model and enjoys political stability.Legislative powers rest with the unicameral 62-seatNational Assembly which is elected by universal suffrageevery five years. The National Assembly elects the Presidentof the Republic, who is the head of State.PAGE 4 | DOING BUSINESS IN MAURITIUS

GLOBAL PRESENCE - LOCAL EXCELLENCEDoing Business inMauritiusEconomyMauritius has the one of the highest GDP in Africawith an annual GDP per head of US$ 13,000 and anaverage growth rate of 5% during the recent years.The major contributors of the economy are:Manufacturing 20.0 %Financial services 11.0 %Wholesale and retail 11.0 %Real estate and business activities 11.0 %Hotels and restaurants 8.7 %Constructions 7.0 %Public administration 6.0 %Legal and Judicial SystemThe legal system is a composite of the French NapoleanCode and the British legal framework.PAGE 5 |DOING BUSINESS IN MAURITIUS

GLOBAL PRESENCE - LOCAL EXCELLENCEDoing Business inMauritiusImmigration toMauritiusPublic and PrivateCompaniesA Non-Citizen can hold shares in a private companywithout any permission, except where the companyowns immovable property, in which case thepermission of the authorities is required. A Non-Citizen can own shares in a Public company withoutany permission from the authorities.Non-Citizen can be employed by the private orpublic companies, provided they have theOccupation permit (permission to live and work)from the relevant authorities. The permission willbe given for up to three years, provided that thesalary per month is MUR 30,000.Sole TradersSole traders can get the occupation permit provided thatthe sales per annum reach MUR 3M.Self-employedIn the case of self- employed, occupation permit can beobtained if the annual gross income is MUR 3M.PAGE 6 |DOING BUSINESS IN MAURITIUS

GLOBAL PRESENCE - LOCAL EXCELLENCEDoing Business inMauritiusRetired PersonsA residence permit for retired non-citizens allows aperson(irrespective of age and nationality) to reside inMauritius for three years provided the person undertakesto transfer to his bank account in Mauritius at least Uss40,000 per annum for his living expenses.Dependants of OccupationPermit HoldersDependents of occupation permit holders are allowed tostay in the country.PAGE 7 |DOING BUSINESS IN MAURITIUS

GLOBAL PRESENCE - LOCAL EXCELLENCEDoing Business inMauritiusBusiness can be registered as :Sole tradersThe trade can be registered in the personal name of thetrader.PartnershipsThe trade can be carried out in the name of a Partnership(Societe).Company-domesticThe Private Company Limited by SharesThe Public Limited CompanyOffshore Companies(either as a GBL1 or GBL2)These companies are administered by ManagementCompanies and are licensed and monitored by the FinancialServices Commission. They carry out their activities outsideMauritius and in any currency other than the MRU.Branch of a Foreign CompanyTrust (domestic or offshore )PAGE 8 |DOING BUSINESS IN MAURITIUS

GLOBAL PRESENCE - LOCAL EXCELLENCEDoing Business inMauritiusFreeholdCommercial property can be acquired by Non-Citizen with theprior approval of the relevant authorities.LeaseholdNon Citizens are allowed to lease immovable properties for aperiod not exceeding 20 years without approval from theauthorities.PAGE 9 |DOING BUSINESS IN MAURITIUS

GLOBAL PRESENCE - LOCAL EXCELLENCEDoing Business inMauritiusEmploymentSocial cost of employment are comparatively low:Employer contributes 6% , whilst employee contributes 3%of basic pay towards National Pension Scheme, with amaximum of MUR 302 and MUR 605, respectively Levy: at 1.5% of basic salary payable by employer National solidarity Fund: 3.5% of basic salary with amaximum of MUR 353.Employment rights (like 22 local leaves, 15 sickleaves, child labour, number of working hours,etc.) are legislated for protection of employees.Discriminations of Employment on grounds ofrace and sex are also legislated against.PAGE 10 |DOING BUSINESS IN MAURITIUS

GLOBAL PRESENCE - LOCAL EXCELLENCEDoing Business inMauritiusTaxation inMauritiusCorporate TaxTaxation of foreign companiesForeign companies are taxed at a standard rate of 15percent on the profits of the branch.Corporate Social ResponsibilityAs from 1 July 2009, all domestic companies are requiredto pay CSR of 2% of book profit. Global Businesses areexempt.Special LevyBanks also pay a special levy of 3.4% of book profit and1% of operating income.Calculating Taxable IncomeAll expenses incurred exclusively in the production ofincome are deductible. Expenditure like entertainments arenot allowable expenses.Inter-company TransfersThere are no restrictions on inter-company transfers,provided there is justification for such charges / expenses.Deemed interest income rules apply in case of intercompanybalances.DepreciationCapital allowances at rates set the Mauritius RevenueAuthority are allowed on all property plant and equipmentand other amounts capitalized, including commercialsshops and offices.ProvisionsAll provisions made in the accounts are nonallowable.However, accruals for any expenses areallowable. Provision for bad debts is not allowable.Bad debts actually written off will be allowed as adeduction provided that steps have been taken torecover the debts.Corporate Income Tax RatesThere is a single tax rate for domestic companiesand individuals. Individual are taxed at a flat rate of15% after the Income Exemption Threshold ofMUR 240,000 / 450,000, depending on the numberof dependents (limited to three).Companies holding a global business licence aretaxed at an effective rate of 3%.Trust whose beneficiaries and settlor are nonresidentsare not taxable in Mauritius.There are 32 DTAs to avoid double taxation ofincome of GBL1 and domestic companies.There is no capital gains tax.Carrying Losses ForwardLosses cannot be carried forward beyond 5 years.The time limit of 5 years does not apply for lossthat is attributable to capital allowances incurredon / after 1 July 2006.PAGE 11 |DOING BUSINESS IN MAURITIUS

GLOBAL PRESENCE - LOCAL EXCELLENCEDoing Business inMauritiusRepatriation of ProfitsDividends paid by a company to its shareholders arenot taxable. After tax Profits repatriated by branch of aforeign company is not subject to income tax.Withholding taxWithholding tax rate are as follows:Interest 15%Royalties 15%Rent 5%Payments to contractors andsub-contractors 0.75%Payments to architects / engineers /property valuer / quantity surveyor 3%VATStandard rate of 15% is chargeable on goods andservices. Exports are zero rated as are charges made topersons who are not resident.Some goods, like rice, flour, bread, education, trainingservices, etc. are exempt.Refund of vat is made on capital goods and where outputvat exceeds MUR 150,000 in case of registered personmaking zero-rated supplies.PAGE 12 |DOING BUSINESS IN MAURITIUS