Mauritius - Not Only Famous For Stamps

Mauritius is situated in the Indian Ocean approximately 800 km off the East Coast of Madagascar. The island of Mauritius was uninhabited before its first recorded visit during the Middle Ages by Arab sailors, who named it Dina Arobi.

In 1598 Dutch soldiers landed in what is now Grand Port and named the islands after the Prince Maurice van Nassau, but that is all that is left of 70 years of Dutch settlement on the Island. The next attempt by the French lasted roughly 100 years, during which time the islands were renamed Isle de France (French Islands) but were also beginning to be administrated by the British East India Company. British Mauritius lasted from 1810 until the country’s independence in 1968 when it declared itself independent from the UK but retained Queen Elisabeth II as head of state. In 1992 the country went ‘all the way’ and reformed itself as the Republic of Mauritius.

With its approx. 1.2 Million residents it has roughly the population of Bahrain. And, as just mentioned, similarly to Bahrain, Mauritius also has a British influenced history as they ruled this Island nation for 158. This roughly 20 year old Republic is now governed by a so called Westminster Democracy, in which a President takes the position of Head of State and Commander in Chief, yet all executive power rests with the Prime Minister as Head of Government.

For many years, Mauritius has been called India’s Cayman Islands. The reason for that is simple, the proximity of Mauritius to India and the country’s well organized and regulated offshore jurisdiction has indeed affected its economy in similar ways than the proximity of the Caymans to the United States has. The government's development strategy focuses on foreign investments and so Mauritius has attracted more than 15,000 offshore entities, many aimed at commercial activities in India and South Africa; Investment in the banking sector alone has reached over US$ 1 billion.

Now why is Mauritius an ideal place for offshore companies when thinking of investing in those parts of the earth? Mauritius is not an offshore jurisdiction in the traditional sense or rather, not only. Mauritius based companies, also known as GBC (General Business Company), are categorized as GBC 1 and GBC 2.

GBC 1 Companies are resident in Mauritius and consequently subject to tax. However, they benefit from both tax credits and a “long-stop” tax rate of 3%. This to a lot of international investors seems more lucrative than the tax rate they are faced with at home. Correctly structured and managed GBC 1 companies may access Mauritius' network of 39 tax treaties, meaning that funds officially taxed in Mauritius are considered ‘clean and clear’ and can be moved and invested across the globe with ease. Consequently, tax practitioners and businesses use this type of companies to structure investments into Mauritius' treaty partners, which include China, India, Luxembourg and Thailand.

Until next week when we examine the Mauritius GBC 2

...your ASvW