SETTING UP & OPERATING BUSINESS IN MAURITIUS

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TYPE OF BUSINESS The principal forms of business enterprises in Mauritius are: · Limited Companies · "Association" ("Société" in French) · Branch of a foreign company The usual choice for foreign investors is a limited company or a branch, although the former is preferred. TAXATION Personal Taxation The Income Tax Act now provides for the "Pay As You Earn" (PAYE) system on emoluments and the "Current Payment System" (CPS) for the payment of income tax by individuals deriving income from business and trade. The same rate applies to residents and non-residents. The annual tax rates are as follows : Taxable Rate Amount Total Amount Income % Rs Payable First R15 000 5 750 750 Next R20 000 15 3 000 3 750 Next R20 000 25 5 000 8 750 Remainder 30 Corporate Taxation Corporate income tax is levied for each year of assessment on a company's taxable income arising in the preceding year. The corporate tax rates are as follows : Type of Company Tax Rate % Tax incentive companies 15 Freeport companies Exempt Net income derived : by a clinic 15 from agriculture other than sugar cane 15 from all other companies including resident trusts 35 by companies quoted on the stock exchange 25 INCENTIVES The incentives offered to encourage both local and foreign investors include tax, financial and other benefits. They have been brought up to date by the Industrial Expansion Act of 1993 and offer almost the same tax incentives, which are mainly : · corporate tax rate of 15% instead of 35% · tax free dividends Freeport The operations of the freeport are regulated by the Freeport Act 1992. This Act provides for the establishment of freeport zones in Mauritius and for the setting up of the Mauritius Freeport Authority (MFA) to act as the developer, promoter, and maintainer of the freeport and to provide for the necessary infrastructure and storage facilities in the freeport zones. Authorised activity includes warehousing and storage, breaking bulk, sorting, grading, cleaning and mixing, labelling, packing and simple assembly. TAX TREATIES Mauritius has entered into double taxation agreements with countries including Germany, France, UK, India, Zimbabwe, Sweden, Malaysia. Swaziland, Italy, China, Pakistan, Madagascar, Singapore, Luxembourg, Namibia, Botswana, South Africa, Sri Lanka and Indonesia. Double taxation agreements which have note yet been ratified include Belgium, Russia, Mozambique, Kuwait, Thailand and Oman. VALUE ADDED TAX VAT legislation has recently been passed in Mauritius and will become effective from 7 September 1998. The legislation will replace the Sales Tax Act 1982 and also provides for a phasing out of the Hotel and Restaurant Tax. The initial rate of VAT to be applied is 10 %. The Hotel and Restaurant Tax, which is currently 10 % will be reduced to 0 % as follows: from 10 % to 4 % as from 7 September 1998 to 30 June 1999 from 4 % to 2 % as from 1 July 1999 to 30 June 2000 from 2 % to 0 % as from 1 July 2000 The VAT legislation follows the norms laid down by the International Monetary Fund, who have assisted in the implementation of the legislation in Mauritius. A Brief Guide to the Introduction of VAT in Mauritius has been published by Ernst & Young, Mauritius to assist clients in the transition from Sales Tax to VAT. For more information on VAT, see our guide to VAT in Mauritius EXCHANGE CONTROL There are no exchange control regulations actually in force in Mauritius. Dividends and royalties may be repatriated freely. VISA REQUIREMENTS All foreigners intending to work in Mauritius need to obtain work permits. A residence permit must also be obtained from the Prime Minister's office.