Mauritius

*Updated October 2017*

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• Legal System
• Inheritance and succession
• Estate planning
• Taxation
• Residence and domicile
• Other relevant information

Legal system

Mauritius is often described as having a hybrid legal system, owing to it having been both a French and British colony at different points of its history. During the French colonial period (1715-1810), some of the Codes elaborated during the Napoleonic era in France were made to apply in the colony – namely, the Civil Code, the Code of Civil Procedure and the Code de Commerce. When the British took over the island, it was agreed that the inhabitants would continue to preserve their religion, laws and customs; French law thus continued to influence our legal system. It was in that context that, in 1838, a Penal Code was enacted, largely inspired by the French Penal Code of 1810. During the British rule, the latter legislated mainly in respect of matters of civil and criminal procedure following English rules. This is why it is fair to say that, though the legal procedure derives mainly from the English legal system, Mauritian substantive law derives from French law. Post-independence, the new laws that were introduced, especially in the commercial and financial context, have tended to be inspired from English statutes, albeit with some refinements. For example, although the Companies Act of 1984 was largely based on the UK Companies Act 1948, the Companies Act 2001 was inspired from the New Zealand Companies Act 1993. As the substantive law of Mauritius derives from French law, the concept of a trust had to be introduced into our legal system by statute. The first Trust Act was passed in 1989 and was an updated and improved version of the English Trustee Act 1925. The Offshore Trusts Act was passed in 1992 alongside the establishment of Mauritius as an International Financial Centre to allow for the setting-up of trusts by non-residents of Mauritius. The Trusts Act (1989) and the Offshore Trusts Act (1992) were repealed in 2001, and replaced by the Trusts Act (2001) to bring all trusts under the same piece of legislation. In 2012, a Foundations Act was passed to provide for the setting up of foundations.

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Inheritance and succession

Succession

Mauritian law governs the inheritance of immovable property situated in Mauritius. The inheritance of movable assets, however, is governed by the laws of the last domicile (i.e. the country of permanent residence) of the deceased. In certain cases, movable property may be governed by another national law designated by the deceased prior to their death, subject to the mandatory public policy provisions of Mauritian law.

The main provisions of Mauritian succession and inheritance law can be found in the Mauritian Civil Code, the Successions and Wills Act, the Code of Civil Procedure, and the Non-Citizens (Property Restriction) Act.

The principles applying to the inheritance of property in Mauritius are:

• Lex rei sitae (the law where the property is located) applies to immovable property
• Lex domicilii (the law of the domicile of the deceased) applies to movable property.

Mauritius is a forced heirship jurisdiction, and reserves a portion of the estate for the children of the deceased. This jurisdiction applies equally to Mauritian citizens and foreigners (provided they are entitled to inherit in Mauritius).

Family law and defined inheritance rules

Property in Mauritius can be given to any person during the lifetime of a person by gift and by a will (subject to exceptions deriving from the application of the donor’s matrimonial regime); however, if the deceased is survived by heirs protected by forced heirship rules, then the donated assets must be pooled back into the estate for the purposes of calculating the reserved and available portions.
A Mauritian will must be in writing, and may be drawn up either as a private deed or a notarised instrument. It is advisable to have a public will drawn up before a notary in Mauritius. This ensures physical preservation of the document, and avoids any subsequent unwarranted litigation regarding the validity of the testament.

In the absence of a will, the legal order of inheritance, in descending order of priority, is:

• The descending line, and the surviving spouse.
• The favoured ascending line (father and mother) and favoured collateral line (siblings and children of predeceased siblings).
• The ordinary ascending line (grandparents, great-grandparents).
• The ordinary collateral line up to the 12th degree.

In the absence of any protected heirs, the deceased’s estate vests in the Mauritian State.

Pursuant to the Mauritian Civil Code, no testamentary provision may encroach upon the ‘reserved portion’, which consists of:One half of the estate, if the deceased leaves one child.

• Two thirds of the estate, if the deceased leaves two children.
• Three quarters of the estate, if the deceased leaves three or more children.

The reserved portion is divided equally among the surviving children and the descendants of any predeceased children (i.e. children who died before their parent). The descendants of a predeceased child are jointly entitled to the predeceased child’s share of the reserved portion.
The unreserved or ‘available portion’ of the estate may be freely willed to any other person, provided that the beneficiary under such a will must not be subject to any legal incapacity.

Probate process

Where the testator leaves a will naming a testamentary executor, his estate will vest in him. The executor will make an inventory and ensure that the property is distributed to the heirs.

Where the deceased person dies intestate, the general principles of succession, as provided for under the Mauritian Civil Code, will apply (please see Succession, above).

Where the deceased person who possesses property in Mauritius dies intestate without leaving any heir in Mauritius, their succession will be considered vacant and will be vested in the Curator of Vacant Estates.

Mental capacity

Under the Mauritian Civil Code, any person 18 years old has the legal and mental capacity to contract, unless proves to the contrary by medical evidence. Only a person of sound mind can make a will. 

An estate may validly be vested in whole or part to a minor or other legally incapable person. A parent or court-appointed guardian must administer inherited property in the interests of a child until they are of age. In the case of a protected adult, the property is administered by the court-appointed guardian or curator.

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Estate planning

Use of trusts in estate planning

A number of HNWI and UHNWIs already use a Mauritius trust for estate, succession-planning and family-office services. A Mauritius trust can be put to a number of possible uses, including but not limited to:

• accumulation and preservation of wealth;
• succession planning;
• asset protection;
• tax planning;
• off balance sheet transactions;
• corporate finance/asset financing; and
• securitisation.

However, any disposition to a trust in breach of forced heirship rules by a settlor who is not a non-citizen will be void to the extent that such disposition exceeds the quotité disponible (disposable portion).

Use of foundations in estate planning

Foundations have some of the attractions of a trust vehicle, and can thus potentially be used for purposes that trusts are used, as described above. However, compared to the trust, which is a common-law concept, the foundation will appeal to clients based in civil-law territories, where they are less familiar with the trust concept.

Similar to the case of a trust, any endowment to a foundation in breach of forced heirship rules by a founder who is not a non-citizen will be void to the extent that such disposition exceeds the quotité disponible (disposable portion).

Types of entities

Companies

The Companies Act (2001) provides for the incorporation of companies with either limited or unlimited liability. Limited companies can be limited by shares or by guarantee. A company can either be set up as private or public. Companies can either be set up as domestic companies, to conduct local business activities, or as Global Business Companies, to conduct international business. Two types of Global Business Companies are available, namely the Category 1 Global Business Company (GBC1), and the Category 2 Global Business Company (GBC2).

A GBC1 may be set up as a protected cell company (PCC), which is able to segregate its assets into different cells within that company with a view to protecting each cell from any extension of liabilities from one cell to another

Société (French Partnership)

The Mauritian Code de Commerce provides for two types of société; namely société en nom collectif (the SNC) and société en commandité simple (the SCS). Under the SNC, the partners have unlimited liability for the debts of the société. Under the SCS, there are both general and limited partners. The general partners are also the managing partners, and they have unlimited liability for the debts of the société. The limited partners’ liability is restricted to the amount they have contributed. A société may also apply for a Global Business Category 1 License.

Partnerships

The Limited Partnerships Act 2011 provides for the registration of limited partnerships in Mauritius. Such a partnership ca n be formed to carry on any lawful business in Mauritius. It must consist of at least one general partner and one limited partner. It must have a partnership agreement. A partnership may apply for a Global Business Category 1 License. The Limited Liability Partnership Act 2016 allows for the setting-up of a Limited Liability Partnership (LLP), which is a type of partnership where every partner in the LLP enjoys limited liability protection against the LLP’s obligations and debts. In addition, partners have limited liability protection against malpractice suits that stem from another partner’s negligent acts. A partner is also given the ability to take part in the decision making of the LLP by taking part in its management. An LLP may apply for a Global Business Category 1 License.

Trusts

Various types of trusts can be created in Mauritius. These will include discretionary, protective, charitable and purpose trusts. The Trusts Act 2001 provides the regulatory framework for the setting up, management and termination of trusts in Mauritius.

Foundations

Foundations can be created in Mauritius by a founder endowing the foundation with its initial assets by inter vivos transfer or by will. The foundation can be created for any legal purpose. It will be managed by a council set up for carrying out the objects of the foundation.

Waqf

A Waqf can be set up by Muslims with the ultimate purpose of pleasing God. They are administered by Mutawallis, and subject to supervision by the Board of Waqf Commissioners.

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Taxation

Income tax system

Mauritius runs a self-assessment system based on the ‘residence’ concept. ‘Resident’ in respect of an individual means a person who has his domicile in Mauritius, unless his permanent place of abode is outside Mauritius. An individual is also a ‘resident’ if he has been present in Mauritius in an income year for a period of, or an aggregate period of, 183 days or more; or if he has been present in Mauritius in an income year and the two preceding income years for an aggregate period of 270 days or more.

A Company shall be a resident when it is either incorporated in Mauritius or has its central management and control in Mauritius.

A person resident in Mauritius is liable to tax on the worldwide income derived by him.

A non-resident is taxed on income derived from sources in Mauritius. However, all income derived from overseas by an individual resident in Mauritius is taxable to the extent it is remitted to Mauritius, though the individual is entitled to claim a tax credit against the Mauritian tax payable on the remitted income in respect of the tax suffered abroad on that same remitted income. Income tax is payable on income derived in the preceding year. The fiscal year runs from 1 July to 30 June.

Personal income tax rates

Mauritius applies a flat rate of 15 per cent on ‘chargeable income’. Chargeable income is calculated by deducting allowable deductions and exemptions and reliefs from gross income. Gross income includes salaries, wages, annuity, pension, income from business, income from property, foreign dividends, royalty, and interest. Allowable deductions include expenditure incurred in the production of income, losses, bad debts and annual allowance (instead of depreciation). An individual who is resident in Mauritius is also entitled to an income exemption threshold, which he can deduct from his income to arrive at his chargeable income, if any.

A solidarity levy of 5 per cent for resident individuals with chargeable income plus dividends (excluding interest income) in excess of MUR3.5m has been introduced in 2017.

Corporate income tax rates

Mauritius applies a flat corporate income tax rate of 15 per cent on chargeable income. The following bodies are subject to corporate tax: companies, trusts, trustees of unit trust schemes and non-resident sociétés (partnerships). It is to be noted that trusts, trustees of unit trust schemes and sociétés are treated as companies for tax purposes.

Where the entity in question has a Category 1 Global Business Licence (GBC1), they are entitled to a tax credit on their foreign income equivalent to the higher of the actual foreign tax paid (up to 15 per cent), or to an 80 per cent deemed tax credit. Thus, the effective tax rate for GBC 1 will be a maximum of 3 per cent.

Where the entity has a Category 2 Global Business Licence (GBC2), they will be exempt from corporate tax, as they are considered not to be (tax) resident in Mauritius.

Every company and resident société is required to set up a CSR Fund equivalent to 2 per cent of its chargeable income of the preceding year. CSR is not applicable to:

• a GBL 1 company;
• a bank in respect of income derived from
  non-residents or GBL corporations;
• an IRS (Integrated Resort Scheme) company;
• a non-resident society; or
• a foundation, trust or a trustee of a unit trust scheme.

Capital gains tax

There is no capital gains tax in Mauritius.

Non-residents

A non-resident person is taxed on income derived from sources in Mauritius.

Withholding tax rate (non-treaty)

The types of payments that are subject to TDS, and the withholding rates of tax applicable to each type, are set out in the table (below).

Payment			WHT (%)
Interest payable by any person (other than by a bank or non-bank deposit-taking institution, under the Banking Act) to individuals and non-resident companies			15
Royalties payable to	a resident		10
	a non-resident		15
Rent			5
Payment to contractors and subcontractors			0.75
Payments to providers of services (accountant/accounting firm, architect, attorney/solicitor, barrister, dentist, doctor, engineer, land surveyor, legal consultant, project manager in the construction industry, quantity surveyor, property valuer, and tax advisor or representative)			3
Payment made by ministry, government department, local authority, statutory body or the Rodrigues Regional Assembly on contracts, other than payments to contractors and subcontractors and payments to providers of services as specified above	for the procurement of goods and services under a single contract, where the payment exceeds 300,000 rupees;		1
	for the procurement of goods under a contract, where the payment exceeds 100,000 rupees;		1
	for the procurement of services under a contract, other than telephone, postal, air travel and hotel services, where the payment exceeds 30,000 rupees		3
Payment made to the owner of an immovable property or his agent			5
Payment made to a non-resident for any services rendered in Mauritius			10
Payment of management fees to an individual by any person, other than an individual, to		a resident	5
		a non-resident	10
Payment made by a person in connection with activities performed in Mauritius by a non-resident entertainer or sportsperson			10

Withholding tax rate (treaty)

The rate of withholding tax on interest, dividend and royalty under the double-taxation treaties vary between 5 per cent and 15 per cent. Some treaties provide for a complete exemption from tax at source.

Taxation at death

There are no inheritance or estate taxes in Mauritius. Registration duty is payable by the buyer and land transfer tax is payable by the
seller of immovable assets in Mauritius at a rate of 5 per cent to 10 per cent.

Other taxes

Gifts, wealth, and estates are not taxed in Mauritius.

Tax treaties

Mauritius has concluded 43 tax treaties, and is party to a series of treaties under negotiation.

The treaties currently in force are: Australia (Partial), Bangladesh, Barbados, Belgium, Botswana, China, the Congo, Croatia, Cyprus, Egypt, France, Germany, Guernsey, India, Italy, Kuwait, Lesotho, Luxembourg, Madagascar, Malaysia, Malta, Monaco, Mozambique, Namibia, Nepal, Oman, Pakistan, Qatar, Rwanda, Senegal, the Seychelles, Singapore, Sri Lanka, South Africa, Swaziland, Sweden, Thailand, Tunisia, Uganda, the United Arab Emirates, the UK, Zambia, and Zimbabwe.

The following eight treaties await ratification: Cape Verde, Gabon, Ghana, Jersey, Kenya, Morocco, Nigeria and Russia.

The following four treaties await signature: the Cote d’Ivoire, Gibraltar, Malawi and the Gambia.

The following 19 treaties are being negotiated: Algeria, Burkina Faso, Canada, the Czech Republic, Greece, Hong Kong, Lesotho, Montenegro, North Sudan, Portugal, Republic of Iran, Saudi Arabia, Spain, St. Kitts & Nevis, Tanzania, Vietnam, Yemen, Zambia, and Mali.

Tax information exchange agreements

Mauritius has entered into TIEAs with Australia, Austria, Denmark, the Faroe Islands, Finland, Guernsey, Norway, Iceland and the US. Additionally, it has signed a TIEA with Greenland and South Korea, but these are not yet in force.

To implement the US Foreign Account Tax Compliance Act (FATCA) in Mauritius, Mauritius signed a Tax Information Exchange Agreement (TIEA) and a Model 1 Intergovernmental Agreement (IGA) with the US in December 2013, and the corresponding legislative action was undertaken to incorporate the requirements in domestic law.

In 2015, an MOU was entered between the MRA and the South African Revenue Service (SARS) in respect of art.4(3) of the Double Taxation Treaty with South Africa.

Mauritius signed the OECD Convention on Mutual Administrative Assistance in Tax Matters in June 2015 and, as a member of the Early Adopters Group, the country had initially planned to implement the Common Reporting Standard (CRS) early. The effective date of 1 January 2016 was subsequently deferred to 1 January 2017, and the first reporting will now start from 31 July 2018.

On 5 July 2017, Mauritius signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the MLI). Based on expressed reservations at this time, 23 tax treaties would be affected by this signing. In respect of its other 20 tax treaties, Mauritius has committed to ensure compliance with the minimum standards through bilateral negotiations.

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Residence and domicile

Special rules on becoming resident

Under the Income Tax Act 1995, a ‘resident’, in respect of an income year, when applied to:

• an individual means a person who:

i) has his domicile in Mauritius unless his permanent place of abode is outside Mauritius;
ii) has been present in Mauritius in that income year, for a period of, or an aggregate period of, 183 days or more; or
iii) has been present in Mauritius in that income year and the 2 preceding income years, for an aggregate period of 270 days or more;

• a company means a company which:

i) is incorporated in Mauritius; or
ii) has its central management and control in Mauritius;

• a société means:

i) a société which has its seat or siege in Mauritius; and
ii) includes a société which has at least one associé (Limited Partner) or gérant (Managing Partner) resident in Mauritius;

• a trust means a trust:

i) where the trust is administered in Mauritius and a majority of the trustees are resident in Mauritius; or
ii) where the settlor of the trust was resident in Mauritius at the time the instrument creating the trust was executed;

• any other association or body of persons, means an association or body of persons which is managed or administered in Mauritius.”

Special rules on ceasing residence

A person would cease to be a resident by not meeting the criteria for being a resident as described above. A person, on ceasing to satisfy the conditions for residency in Mauritius, will be deemed to be a prohibited immigrant and a deportation order will be issued against them.

Domicile concept for gifts and inheritance

Lex rei sitae (the law where the property is located) applies to immovable property.
Lex domicili (the law of the domicile of the deceased) applies to movable property.

Taxation of holdings by non-residents on death and of gifts

• Gifts: none.
• Death: none.

Reporting/auditing requirements

Individuals are required to submit returns of income and pay tax, if any, by 30 September. Where the return is filed electronically and payment of tax, if any, is also made electronically, an extended delay of up to 15 October is applicable.

Companies with accounting years ending on 30 June are required to submit their returns and pay tax, if any, by 29 December – that is, within six months after the end of the accounting year. The due date for the submission of annual income tax return with no tax liability by companies whose accounting year ends in June is by 15 January of the following year.

A company (other than a small private company and a Category 2 Global Business Company) is required to prepare financial statements that must be audited and filed with the Registrar of Companies (or the FSC for holding Category One Global Business Companies).

A small private company, being a domestic private company with annual turnover of less than MUR50 million, and a Category 2 Global Business Company is only required to file only a financial summary with the Registrar of Companies.

Trusts and foundations are not required to prepare or file audited financial statements.

CRS will come into effect as from 1 January 2017 in Mauritius. Companies, partnerships and trusts are required to determine their classifications under CRS, and may need to apply due diligence procedures to record the tax residence of their account holders and controlling persons, and, where applicable, report to the Mauritius Revenue Authority (MRA). Investors on-boarded by financial institutions on or after 1 January 2017 will be required to provide details of their tax residence status under CRS by completing self-certification forms. For pre-existing investors (accounts in existence as at 31 December 2016), due diligence will need to be undertaken to establish their tax residency status. The first exchange of information with the MRA will take place by September 2018.

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Other relevant information

Asset protection laws

Mauritius has a comprehensive network of Investment Promotion and Protection Agreements (IPPAs) for protection against expropriation and nationalisation. The IPPAs offer the following guarantees to investors:

• free repatriation of investment capital and returns;
• a guarantee against expropriation;
• the most favoured nation rule with respect to the treatment of investment, compensation for losses in case of war or armed conflict or riot, etc.; and
• arrangement for the settlement of disputes between investors and the contracting states.

In addition, both the Trusts Act and the Foundations Act contain specific provisions aimed at preventing a trust or a foundation from being attacked on the basis of succession rights (including forced heirship), marriage, divorce and/or insolvency of a settlor/founder or beneficiary. Additionally, a non-resident
settlor shall generally be deemed to have had the capacity to transfer or dispose of assets to a trust.

Foreign currency restrictions

No, there are no exchange controls in Mauritius. 

Foreign ownership restrictions

Authorisation is required from the Prime Minister’s Office before real property can be purchased by a foreigner in Mauritius. The main derogations are acquisitions by inheritance, or by the effect of marriage (subject to certain provisos), or under the Integrated Resorts (luxury villas) and Real Estate Development schemes. The acquisition of movable assets in Mauritius is not subject to such restrictions.

AML/due diligence and other requirements and regulatory procedures for advisors

• To establish a trust
• For incorporation
• To open a bank account

An advisor is required to comply with the provisions of the Financial Services Act, 2007, the Prevention of Corruption Act 2002, the Prevention of Terrorism Act 2002 and the Mutual Assistance in Criminal Matters Act 2002, the Financial Intelligence and Anti-money Laundering Act
2002, and the Financial Transactions Reporting Act 2004.

For all the above purposes, the ‘Customer Due Diligence’ principle, as established under the Code on the Prevention of Money Laundering and Terrorist Financing (AML Code) issued by the Financial Services Commission shall be applied to, in the case of a trust, the settlor, trustees, protector, enforcer, beneficiaries and authorised signatory/person holding a power of attorney; and, in the case of foundations, the founder, member of the council, beneficiaries, authorised signatory/person holding a power of attorney, to ensure that valid proof of identification is obtained and the source of funds is verified.

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STEP branches in Mauritius

There is one STEP branch in Mauritius, which was established in 2009.

• STEP Mauritius

Firms in Mauritius

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Members in Mauritius

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