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Mauritius: Global business companies licensed on or before 16 October 2017 should prepare for major changes this year

8 February 2021
– 4 Minute Read


Reforms made to the Mauritius global business regime in 2018 will have a profound impact on global businesses in the country in the coming year, impacting both their licences to operate and the tax regime applied.

Following the 2018-19 budget speech and the amendments made to the Financial Services Act 2007, the categories of business licences applied to global businesses were changed as follows:

  • The category 1 global business licence (GBL 1) was renamed as global business licence (GBL). A GBL entity, also known as a GBC entity, has most of the attributes of a GBL 1 entity save that the taxation thereof is different. The deemed foreign tax credit of 80% available to GBL 1 entities, and which guaranteed a maximum taxation of 3% for entities holding GBL 1, was eliminated as from 1 January 2019 and a new partial exemption regime was introduced.
  • The category 2 global business licence (GBL 2) was abolished and a new authorised company (AC) was introduced. An AC has most of the attributes of a GBL 2 entity save that it is not an exempt body for income tax purposes. An AC is required to conduct its business principally outside of Mauritius and the majority of its shares must be held by persons who are not citizens of Mauritius. It must be centrally managed and controlled outside of Mauritius and is therefore non-resident in Mauritius for income tax purposes. As such, it does not benefit from any double taxation agreements that Mauritius is a party to. It must, however, file a return of income to the Mauritius Revenue Authority within six months of its year end.

To ensure a smooth transition to the new regulatory environment and tax regime, a grandfathering period until 30 June 2021, was granted to GBL 1 and GBL 2 entities licensed on or before 16 October 2017.

GBL 1 Entities

As from 1 July 2021, all GBL 1 entities licensed on or before 16 October 2017 will automatically be deemed to hold GBL licences. A GBC will no longer be entitled to a maximum effective tax rate of 3% on all its income under the new partial exemption regime and will be subject to tax at the normal rate of 15%.

Nevertheless, GBC entities, like any other Mauritius tax-resident entities, will be entitled to either claim:

  • tax credits on actual foreign tax suffered where this can be evidenced; or
  • a partial exemption of 80% of the Mauritian tax liability on certain types of income, such as interest and foreign sourced dividends, provided that certain prescribed substance requirements are met.

GBL 2 Entities

All GBL 2 licenses issued on or before 16 October 2017 will lapse after 30 June 2020. Notwithstanding the lapsing of its licence, a GBL 2 entity must continue to comply with such terms and conditions as the Financial Services Commission (FSC) may determine, remain subject to the obligations of a licensee and comply with the directions of the FSC for the orderly dissolution of its business and the discharge of its liabilities.

In order to continue to be licensed in Mauritius, a GBL 2 entity may convert into a GBC or an AC on or prior to 30 June 2021. The expected timeline for the conversion from a GBL 2 entity to an AC is five to seven business days upon the submission of the application with the FSC and Registrar of Companies whereas the conversion from a GBL 2 entity to a GBC may take seven to 10 business days.

Additional steps such as the appointment of Mauritius-resident directors and a company secretary will be required for the conversion to a GBC.

Accordingly, clients that operate GBL1 entities, should consider the tax impact for these entities beginning 1 July 2021, when they will no longer be entitled to an effective tax rate of 3% on all their income. Clients that operate GBL 2 entities are required to make a decision with regard to the conversion of such entities to GBCs or ACs on or prior to 30 June 2021.