Doing business in Africa: Mauritius - PwC...BEPS action plan 25 Doing Business in Africa July 2019 Export Tax 3% Minimum Capital USD 1 PwC Tax Framework Overview Residence Rule Source

Doing business in AfricaMauritius

July 2019

PwC

Agenda

1. Why this seminar?

2. Doing Business in Mauritius

3. Service Offering

4. Subscription

2

July 2019Doing Business in Africa

Why this seminar

PwC

✔ Africa continues to be a region with vast unexplored potential.

✔ This seminar shall provide some insight on doing business in Mauritius, what this area has to offer, and the risks investors should be aware of.

PwC 4


PwC

Republic of Congo

Seminars so far

Ghana

Angola (2x)

Nigeria

Botswana (2x)

Ethiopia (2x)

Kenya (2x)

Mozambique (2x)

Namibia (2x)

Rwanda

South Africa

Tanzania

Zambia (2x)

Mauritius (2x)

Seychelles

Cameroon

Malawi (Republic of)

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Doing business in Mauritius

PwC

Agenda

2.1. Country Context

2.2. Business Vehicles

2.3. Legal and Labour

2.4. Tax Framework

7


Country Context

PwC

Political

• Democratic system with a separation of powers

• General election every five years

• Renowned for political stability

• Political power lies with the Prime Minister of the

country and the Cabinet

• President appointed by national assembly for 5

years on motion made by Prime Minister

Country Context

Proprietary and confidential. Do not distribute.9


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Socio-economical

• Multicultural and pluralistic society

• Middle Income aiming to be High Income country

• GDP per capita – USD 21,628 in 2017

• Decrease in Gini coefficient in 2017 from 0.414 to

0.400, indicating an improvement in the income

distribution

• Main economic Pillars – progress from 3 pillar

economy (Sugar, Tourism & Textile) to modern

stronger economy revolving further around

• ICT

• Hospitality

• Property development

• Financial Services

Country Context



Business Vehicles

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2.1 Types of Entities 2.2 Company vs Branch

Business Vehicles

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1. Domestic Company 2. Global Business

Licence

3. Authorised

Company

4. Trust

Types of entities

5. Branch

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Step 1:

Register with the

Mauritius Network

Services (“MNS”)

online to obtain a

username and

password. Request

for approval from

the Financial

Services

Commission

Business Entities Incorporation

Step 2:

Register the business and incorporate the company by filling in the relevant application form and by uploading required documents.

Step 3:

Payment can be done by Credit Card online or by electronic transfer via local banks.

Step 4:

Issue of an Electronic Certificate of Incorporation and a Business Registration Card (BRC)

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PwC

Business VehiclesCompany versus Branch

Item Distinguishing factor Company Branch

1 Corporate Tax Rate 3% / 15% 3% / 15%

2 Eligibility to claim deemed FTC (80%) / Partial Exemption Yes Yes

3 Relief for actual foreign tax suffered Yes Yes

4 Compulsory VAT registration Turnover > Rs.6m (approx. USD 170k) Turnover > Rs.6m (approx. USD 170k)

5 Treaty benefits Yes No

6 Audited accounts Mandatory Mandatory

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Legal and Labour

PwC

3.1 Legal system at a glance 3.2 Labour

Legal and labour

3.3 Bank of Mauritius Requirements

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PwC

Legal system at a glance

Sources of Law

• Constitution follows parliamentary democracy based on

the Westminster model

• Private laws largely based on Napoleonic codes

• Administrative laws based mostly on common law

• International treaties and case laws also used as sources

of law in Mauritius

Legal and labour



PwC

Legal system at a glance

Dispute Resolution

• Litigation

• Lower courts and tribunals

• Supreme Court of Mauritius (Highest domestic court)

• Privy council of the Queen (Supreme court of appeal)

• Arbitration

• Mediation

Legal and labour



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Labour – Investor Considerations

• Business Visa

• Occupational Permit

• Work Permit

Legal and labour



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Labour – Immigration documents

Immigration documents to be provided by foreign

employees:

• Company documents/ licences of local host employer

• Passports/ Valid Business Visa

• Birth Certificate

• Medical Report

• Academic Qualification

• CVs

• Contract of Employment and Job Description

Legal and labour



PwC

Bank of Mauritius Requirements

• No Foreign Exchange Restrictions in Mauritius

Bank of MauritiusRequirements



Tax Framework

PwC

4.1 Tax Overview 4.2 Tax Incentives

Tax Framework

4.3 Structuring

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PwC

Tax Overview

Proprietary and confidential. Do not distribute.

No Capital

Gains

Tax

Substance

requirements

POEM /

Central

Management

and Control

VAT 15%

Neutrality

Corporate

Tax

3% / 15%

Foreign Tax

Credit System/

80% partial

exemption

No thin

capitalisation

rules

BEPS

action plan

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Export Tax

3%

Minimum

Capital

USD 1

PwC

Tax FrameworkOverview

Residence

Rule

Source

Rule

Income derived from

Mauritius whether the

person was resident in

Mauritius or elsewhere

A person resident in

Mauritius is taxed on income

derived worldwide

Taxing

principle

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Item Tax or Levy Type Rate

1Corporate Income Tax 3% / 15%

2 Capital gains Nil

3 Individual Income Tax 10% / 15% / 20%

4 Value Added Tax 15% on specified items

5 Import VAT 15% on specified items

6 Property Transfer Tax Land Transfer Tax and registration duty at 5%

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Item Tax or Levy Type Rate

7Stamp duties Minimal amounts (approx. USD 30) per document

8Transfer pricing

No formal legislation - Arm’s length provision in domestic law – Introduction of

CbCR.

9 Withholding tax on dividend None

10 Withholding tax on interest 15% (Nil for GBL out of foreign source income)

11

Withholding tax on royalties

Payable to a resident – 10%

Payable to a non-resident – 15%

Payable to a non-resident out of foreign source income- 0%

12Withholding tax on services

Specified Professional Fees – 3%

Provided by a non-resident for services rendered Mauritius – 10%

13 Permanent Establishment (e.g. Branch) 15%

14 Group relief N.a

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Tax FrameworkCategory 1 Global Business Licence - Pre Finance Act 2018

• GBC1 taxed at 15%

• Eligible to 80% deemed

foreign tax credit or actual tax

suffered

• Offset against Mauritius tax

payable

• Whichever is higher

• Deemed FTC of 80% of the

amount of tax due in MU

• Available on all income types

• To all GBC1 companies

• Actual foreign tax

• Include withholding tax or

underlying tax suffered

• On the foreign source

income

80%

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Tax FrameworkGlobal Business Licence - Post Finance Act 2018

80%• No actual foreign tax credit allowed

on foreign source income if 80%

partial exemption claimed

• Introduction of 80% partial

exemption regime on

specified income

• Phasing out of Deemed

FTC effective as from 1

Jan 2019

• Foreign dividend, subject to amount not allowed as

deduction in source country

• Foreign source interest income

• Profit attributable to a permanent establishment of a

resident company in a foreign country

• Foreign source income derived by a Collective

Investment Scheme (“CIS”), Closed End Funds, CIS

manager, CIS administrator, investment adviser or

asset manager licensed or approved by the Financial

Services Commission (“FSC”)

• Income derived by companies engaged in ship and

aircraft leasing

• Budget 2019/20 – companies engaged in leasing and

provision of international fibre capacity, reinsurance

and reinsurance brokering and in the aircraft industry

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PwC

Tax FrameworkGlobal Business Licence - Post Finance Act 2018

• 80% exemption available

upon meeting pre-defined

substance requirements as

prescribed

• Proportion of expenses in

relation to exempt income

disallowed where 80% partial

exemption is claimed

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PwC

Tax FrameworkSubstance Requirements

Effective as from 1 January 2019, a company holding a GBL must, at all times:

1. Carry out its core income generating activities by:

• employing, either directly or indirectly, a reasonable number of suitably qualified persons to carry out the core

activities

• having a minimum level of expenditure, which is proportionate to its level of activities

2. Be managed and controlled from Mauritius

3. Be administered by a management company

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Tax FrameworkEligibility to 80% Partial Exemption

Dividend

• Comply with the filing obligations under the Companies Act or the Financial Services Act

• Has adequate resources for holding and managing share participations

Interest/ Ship and Aircraft leasing

• carries out its core income generating activities in Mauritius

• employs directly or indirectly an adequate number of suitably qualified persons to conduct its core income

generating activities

• incurs a minimum expenditure proportionate to its level of activities

Ship and Aircraft leasing - Core income generating activities includes agreeing funding terms, identifying and acquiring assets to

be leased, setting the terms and duration of any leasing, monitoring and revising any agreements, and managing any risks.

Interest - Core income generating activities includes agreeing funding terms, setting the terms and duration of any financing,

monitoring and revising any agreements, and managing any risks.

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Tax FrameworkGlobal Business Licence – Transitional Provision

• Licences issued before 16 Oct

2017 - grandfathered up to 30

June 2021

• Licences issued after 16 Oct

2017 - grandfathered up to 31

December 2018

• After end of transitional period,

existing GBC1 will be deemed

to be converted to GBL. No

additional conversion will be

required

Grandfathered

Licence

Issued

After

31 Dec 2018

Licence issue date

cut-off

16 Oct

2017

GrandfatheredLicence

Issued

Before

30 June

2021

Deemed FTC -

80% available during

grandfathered period?

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PwC

Tax FrameworkCategory 2 Global Business Licence - Post Finance Act 2018

• GBC2 phased out as from 1 January 2019

• Transitional provisions

▪ Licences issued before 16 Oct 2017 -

grandfathered up to 30 June 2021

▪ Licences issued after 16 Oct 2017 -

grandfathered up to 31 December 2018

• After grandfathered period – GBC2 will have

to comply with conditions of FSC and comply

to directions for the orderly dissolution of its

business and discharge of its liabilities

Grandfathered

Licence

Issued

After

31 Dec 2018

Licence issue date

cut-off

16 Oct

2017

GrandfatheredLicence

Issued

Before

30 June

2021

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PwC

Tax FrameworkAuthorised Company - Post Finance Act 2018

Companies conducting

business and having their

place of effective

management will need to

apply for an authorisation

from the FSC as an

Authorised Company

Has to be made through a

management company in

Mauritius and should at

all times be administered

by a management

company

Authorised companies are not allowed to

carry out certain activities

• Banking

• Financial services

• Carrying out the business of holding or

managing or otherwise dealing with a

collective investment fund or scheme as a

professional functionary

• Providing of registered office facilities,

nominee services, directorship services,

secretarial services or other services for

corporations

• Providing trusteeship services by way of

business

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PwC

Tax FrameworkAuthorised Company - Post Finance Act 2018

Authorised companies will be held to be

conducting business outside of Mauritius if

engages in certain dealings or transactions

Offences will be liable to a fine not exceeding

Rs1m

• Investing in any securities listed on a securities

exchange in Mauritius

• Opening and maintaining with a bank an account in

foreign currency

• Holding any share, debenture, security or any interest

in or dealing with a GBL

• Entering into a business relationship with the holder of

a Management Licence or a law practitioner, legal

consultant, law firm or a qualified auditor in Mauritius

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PwC

Tax FrameworkProposed Amendments

Item Proposed Tax Implementation or Change Amendment detail

1Removal of POEM

Place of Effective Management to be removed under domestic law and more

emphasis on Central Management and Control.

2 Anti Abuse Rule (CFC) Proposed introduction of Controlled Foreign Company Rules

3 Real Estate Investment Trusts New attractive regime will be introduced to promote the development of REITs.

4 Banks New tax regime for Banks

5Tax holidays

Tax incentives for Innovation Box regime, company developing marinas, e-

commerce, bunkering companies.

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PwC

Total Tax Rate (%)

3% /

15% 152 8

Tax FrameworkPaying Taxes

Time to comply (hours) Number of payments

The tax payments indicator reflects the

total number of taxes and contributions

paid

Mauritius ranked 6th

for ease of paying

taxes worldwide&

1st in Africa

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Tax FrameworkPermanent Establishment

• Not defined in domestic law

• Adhere to international rules

• Follow OECD guidelines

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PwC

Tax FrameworkPermanent Establishment

Specific considerations:

• Employees staying in Mauritius for more than 183 days

• Place of management

• Branch

• Office Factory/ Workshop

• Dependent Agent

• Mine, oil or gas well, a quarry or any other place of

extraction of natural resources

• Building site or construction or installation project if last

more than 6 or 12 months

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PwC

Tax Incentives

Tax Framework


Companies Years of Tax holiday

1Global Administration

Licence8

2 Global Treasury Activities

Licence5

3 Smart City 8

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PwC

Tax FrameworkTax Structuring - Global Headquarters Administration & Global Treasury Activities

Licences Tax holidays Physical office Minimum no. of employees

resident in Mauritius

Asset under

management

Minimum annual

operating

expenditure

Corporate Social

Responsibility

(“CSR”)

Global

Headquarters

Administration

8 years Yes 10 professionals with at least

2

at managerial positions

N/A MUR 5 million

(approx. USD 135k)

2% of net income

Global Treasury

Activities

5 years Yes 4 professionals with at least 1

at managerial position

N/A MUR 2 million

(approx. USD 54k)

2% of net income

Eligible to DTA

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PwC

Tax FrameworkTax Structuring

Global Headquarters Administration Licence

Provision of at least 3 of the following services to at least 3 related

corporations:

• Administration and general management

• Business planning and development and coordination

• Economic or investment research and analysis

• Services related to international corporate headquarters in

Mauritius

• Such other global headquarters administration services as may

be specified in FSC Rules

Global Treasury Activities Licence

Provision of at least 3 of the following services to at least 3 related

corporations:

• Arrangement for credit facilities, including credit facilities with

funds obtained from financial institutions in Mauritius or from

surpluses of network companies

• Arrangement for derivatives

• Corporate finance advisory

• Credit administration and control

• Factoring, forfeiting and re-invoicing activities

• Guarantees, performance bonds, standby letters of credit and

services relating to remittances

• Management of funds for designated investments

• Such other global treasury activity as may be specified in FSC

Rules

44


PwC

Tax Structuring

Considerations:

1. Repatriation of funds

2. Exit Strategy

3. Which holding location to select?

Tax Framework



PwC

Tax Framework


46 Signed

Treaties6 Await

Ratification

17 in force - with

African countries

5 Awaiting

Signature

Source: MRA

website

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PwC

Tax FrameworkBase Erosion and Profit ShiftingAction 5 – Harmful Tax Practice

OECD confirms

Mauritius does not

have harmful tax

practice

15 Nov 2018

The Ministry of Finance

takes commitment to

resolve by 31

December 2019

8 Feb 2019

The council of the

European Union

challenges Mauritius

on indirect substance

1 Feb 2019

Awaiting

communique

To date

EU Consideration

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PwC

• Applicable to multinational enterprise (MNE) groups with consolidated

group revenue of €750 million or more

• CbC Reporting is effective as from 1 July 2018

• CbC report to be filed in Mauritius when:

▪ MNE group’s ultimate parent entity (“UPE”) is tax resident in

Mauritius; or

▪ MNE group nominates an entity which is tax resident in Mauritius as

the Surrogate Parent Entity (“SPE”).

• CbC report should be filed in Mauritius not later than 12 months from

the last day of the accounting year of the MNE group

• MRA should be notified whether or not the Mauritius tax resident entity

of the MNE group is the UPE or the SPE of the MNE group.

• Notification should be done not later than 12 months from the last day

of the accounting year of the MNE group.

Tax FrameworkBase Erosion and Profit Shifting Action 13 – Country by Country Reporting (CbCR)



Service offering

PwC

The Africa Coordination Centre (ACC)How the Africa Desk can support you

50


Managing cross border

engagements with one

single point of contact.

Central contact for quick technical guidance.

Identification of right subject matter experts and oversight of high quality advice.

Guidance on business practices and experiences when dealing with other African countries.

Proactive regular updates on new developments in engaged countries.

Coordinating thought leadership pieces and proposals including multiple territories.

PwC

PwC MauritiusWhat we offer

Experienced team

In Mauritius, PwC exists since 1984. The firm is recognised as a thought

leader and a change initiator, where more than 300 professional staff

combine the resources of our global network with detailed knowledge of

local issues.

Tax Compliance

We assist companies in relation to tax services ranging from corporate tax compliance, Tax

Deduction at Source (“TDS”) to Value Added Tax (“VAT”) services.

Serving your needs

We favour an industry approach to serve a large number of companies

doing business in Mauritius, ranging from multinationals, a cross section of

local businesses, to public institutions.

Tax Advisory and Investigation

At PwC Mauritius we offer additional services such as tax advisory, regulatory matters as well as

assistance on tax investigation raised by the Mauritius Tax Authority (“MRA”)

Tax Automation and Data Analytics

Access to data is key to enhancing the value of the tax function. Leveraging data for applied

decision-making is becoming the norm and the tax function, being one of the largest consumers of

data, is transforming. At PwC Mauritius we develop tailor-made tax automation services

51


PwC

Our Team

The Africa Coordination Centre Team

52


Alan Seccombe

Partner

T: +27 11 797 4110

E: [email protected]

Ayuk Takor

Manager

T: +27 11 287 0741


mailto:[email protected]


PwC

Our Team

PwC Mauritius

53


Anthony Leung Shing

Country Senior Partner and Tax Leader

T: +230 404 5071


Dheerend Puholoo

Tax Partner

T: +230 404 5079


Feroz Hematally

Tax Senior Manager

T: +230 404 5013





Subscription

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Subscriptions


55

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Thank you

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Documents

Doing business in Africa: Mauritius - PwC...BEPS action plan 25 Doing Business in Africa July 2019 Export Tax 3% Minimum Capital USD 1 PwC Tax Framework Overview Residence Rule Source