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Mauritius: Jurisdiction of substance

Mauritius has throughout the last two decades forged a strong reputation as a premier international financial centre. Contrary to traditional offshore centres, it offers the ability for treaty-based tax planning through its network of double taxation avoidance treaties (DTA). In order to benefit from the DTAs, an investment should be made by a resident of Mauritius, generally through a Global Business Category 1 (GBC1) company.

It has always been the case that GBC 1 companies had to demonstrate that they would be centrally managed and controlled from Mauritius. In doing so, the Financial Services Commission (FSC) would consider whether the GBC1 company: (i) will have at least two resident directors of sufficient calibre to exercise independent of mind and judgement; (ii) will maintain at all times its principal bank account in Mauritius; (iii) will keep and maintain, at all times, its accounting records at its registered office in Mauritius; (iv) will prepare its statutory financial statements, which should be audited in Mauritius; and, (v) will provide for meetings of directors to include at least two directors from Mauritius.

To align with the global regulatory environment, the FSC has reviewed its approach to regulation. In addition to the above, the FSC wants to see additional substance by way of one of the following requirements: (i) an office premises in Mauritius; (ii) employment of staff; (iii) choosing Mauritius as the seat for arbitration of disputes; (iv) holding assets worth at least $100 000 in Mauritius; (vi) listing on a Mauritius stock exchange; or (vii) incurring reasonable expenditure in Mauritius.

The FSC has also issued special guidelines for professional directors, which must be followed to support the additional substance requirements.

Assad Abdullatiff

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