Mauritius founded within the 1970’s one amongst the world’s first Export Processing Zones (EPZs).

within the 90’s the country decided to line up a world Financial Centre which might be to the services
sector what the EPZ’s were for the manufacturing sector. Mauritius has since attracted variety of
international businesses investing across the world. Investment vehicles ranging from investment
holdings to major collective schemes are founded and administered within the country.

The new Financial Services Act adopted in July 2007 ushers in a very recent simplified regulatory regime
which distinguishes between Mauritian companies conducting business in Mauritius and people
conducting business outside Mauritius. Companies whose ultimate purpose is to produce a service or to
create an investment abroad may choose the worldwide business licence.

The Global business was established in 1992 to draw in foreign investment to a large range of banking
and non-banking activities. By January 2010, there 2 were 28000 Global Business vehicles established in
Mauritius, including some 600 funds. Mauritius is a good offshore jurisdiction, building on its 36 DTAs, a
number of which have been in existence since 1980. With its specialist Global Business legislation,
Mauritius enables corporate and commercial clients to have access to the benefits of its DTAs for
investment purposes, and, at the same time, is attracting private clients to manage their finances
outside the EU.

The global business has experienced sustained growth. During the identical year, the Freeport was
created in an exceedingly view to liberalize the worldwide financial sector. the worldwide business
contributed on the average 5% of GDP over the previous few years. The Financial Services Act 2007
defined the worldwide business as a resident corporation that proposes to conduct business outside
Mauritius may apply to the FSC for a Category 1 or Category 2 Global Business License. GBL1 companies
may conduct financial services business furthermore as nonfinancial services business. On the opposite
hand, GBL2 companies can conduct any activity except financial services including be banking, holding,
corporate services, trusteeship services or managing a CIS insurance. The global business industry
experienced an increase of about 13% in amount of GBC 2’s in 2011 as compared to 2010 indicating that
the jurisdiction ensures certainty and attractiveness to hold out business, in keeping with the FSC Report
2011. The number of GBCs kept on increasing showing growingly financial investments. In 2011, GBCs
were being occupied by 154 Management companies. Management companies are service providers
which act as intermediaries between their clients and also the FSC. Despite a relentless rise within the
turnover for management companies in Mauritius for the last four consecutive years, an approximate
fall of 40% was registered from the year 2010 to 2011. The profit before tax dropped by almost 54% in
2011 in comparison to year 2010.

It was reported that Mauritius had insufficient money sanctions to discourage financial crime. In the
previous few years, Mauritius has been facing demands for reform in conjunction with tax transparency
and anti-avoidance initiatives by the OECD and therefore the EU. Under the OECD’s BEPS initiative,
Mauritius had promised to include minimum standards and possibly other BEPS-compliant features into
its laws and bilateral double taxation avoidance agreements (DTAs), while the Europeean Union had also
objected to the Deemed Foreign reduction (DFTC) that was available to GBC1s but to not domestic firms
(“ring-fencing”). Steps are undertaken toward meeting these demands, including: Revision of DTAs: The
authorities placed all the applicable DTAs (41 ) under the coverage of the OECD’s Multilateral tool —a
synchronized framework for enshrining BEPS actions in existing DTAs in a very time-efficient manner.
These treaties will be amended to go with the BEPS minimum standards, which include provisions
forestalling treaty shopping (e.g., a “principal purpose test” to analyse whether a business was mainly
founded to avoid taxes). The ratification process for the submitted DTAs is anticipated to be completed
by end-2019. Additional BEPS-related substance requirements were met by enshrining appropriate
provisions within the taxation Act. Elimination of the DFTC: The DFTC that allowed GBC1s to scale back
their domestic liabilities by80 percent without furnishing proof of actual payment abroad has been
replaced with a brand new partial exemption system, which demand that qualifying foreign income of
up to 80% of any business (i.e both global and domestic companies) are going to be exempt from
domestic taxation, subject to meeting enhanced substance requirements. cancellation of the GBC2
license: The license for the less-transparent Category 2 Global Business Company (GBC2) is being phased
out through mid-2021 and a brand new vehicle of “Authorized Company ”Authorized company has been
introduced. Authorized companies are required to conduct business and have their place of effective
management outside Mauritius. If found to not meet these requirements, Authorized companies would
be subject to domestic taxation.

The recent budgetary measures clearly demonstrate the determination of the govt to position Mauritius
as a world Financial Centre of repute and a centre of excellence. In its determination to reform the
Financial Services Sector, the govt in its 2018-2019 budget brought about the subsequent measures for
the worldwide Business Sector: 1. putting in of a committee A committee has been founded under the
aegis of the Prime Minister’s Office to make sure a timely and effective implementation of the
recommendations of the Financial Services Blueprint. This Blueprint will undoubtedly strengthen the
prevailing dynamics of the worldwide sector. 2. Introduction of a replacement harmonized fiscal regime
for Domestic and Global Business Companies Considering the ever-increasing challenges faced by the
worldwide sector, a new harmonized fiscal regime are going to be introduced for domestic and Global
Business Companies and a specific fiscal regime for banks. 3. Deemed Foreign decrease Deemed Foreign
decrease available to holders of a Category 1 Global Business Licence are going to be abolished as from
31 December 2018. 4. Partial Exemption Regime of 80% A Partial Exemption Regime of 80% of specified
income are going to be introduced. This exemption will be enjoyed by all companies in Mauritius except
banks and can be applicable to the subsequent income: – Foreign source dividends and profits because
of a remote permanent establishment; – Interest and Royalties; AAMIL (MAURITIUS) LTD BUDGET
HIGHLIGHTS 2018-2019 FOR the worldwide BUSINESS SECTOR – Income from provision of specified
financial services. It is to be noted that companies who wish to learn from this partial exemption will
must satisfy pre-defined substantial activities requirements. Furthermore, this enhanced substance
requirement will be also applicable to Captive Insurance Companies. However, the prevailing system for
relief of double taxation are going to be still applicable where the partial exemption isn't available for
taxes suffered on foreign income. 5. Issuance of recent Category 2 Global Business Licence No new
Category 2 Global Business Licence are going to be issued as from January 2019 and corporations
existing under this regime before 16 October 2017 are going to be phased out by 30 June 2021. This
Grandfathering provision will apply for Companies licensed before 16 October 2017 and can be in force
until 30 June 2021. 6. Removal of all restrictions applicable to dealings in Mauritius All restrictions
applicable for Global Business Companies dealing in Mauritius will now be removed. 7. Enhanced
substance requirements for Global Business Companies Global Business Companies will should
demonstrate and meet the substance requirements to be licensed by the Financial Services Commission.
It further confirms the determination of the Government to position Mauritius as a world Financial
Centre of repute and a trusted and substance-based jurisdiction. The Financial Services Commission are
going to be granted additional powers to make sure that licensees maintain the licence requirements in
the slightest degree times and can have the powers to finally end up one amongst its past licensees to
cater for situations where the licences are terminated. 8. New Framework for oversight of Management
Companies A new framework are going to be established to control and improve the oversight of
Management Companies. 9. Enhancing Mauritius as an IFC Mauritius will add collaboration with OECD
to position as a Regional Centre for capacity building and best practices to combat financial
malpractices. The adoption of international best practices and transparency in disclosure requirements
will increase our repute as a world Financial Centre. 10. AML/CFT Framework The Anti-Money
Laundering/Countering Terrorism Financing are going to be amended to cater for disclosure and
availability of beneficial ownership information purposes. Amendments are going to be also brought to
harmonize and revamp with relevancy the event in Fintech. 11. National Regulatory Sandbox Licence
Committee The Government will implement a National Regulatory Sandbox Licence Committee for
activities relating to Sandbox Licensing for FinTech activities. The Financial Services Commission will
collaborate with the Board of Investment to ascertain the suitable framework for the issuance of
Sandbox Licences. 12. New Licences The Financial Services Commission will create new licences to
produce investors with a regulated environment for the safe custody of digital assets and to enable
digital assets exchange. The following licences will now be issued: – Creation of Custodian of Digital
Assets Licence; and, – Creation of the Digital Asset Marketplace Licence. In line with the above, the
Financial Services Commission also will implement guidelines on investment in crypto currency as a
digital asset and can make sure that applicants under the Fin Tech activities have the suitable policies
and capacities in terms of cyber-security and cyber resilience. This reaffirms the willingness of the
Mauritian Government to leverage the island on new technologies and to position Mauritius as a fintech
hub.

In Mauritius, various investment vehicles which can be used to structure fund like an organization,
limited partnership, trusts and guarded cell companies. A fund conducting business principally outside of
Mauritius and whose majority of shares/voting rights/legal or beneficial interests are held by non-
citizens will be required to apply, additionally to their fund authorisation, for a worldwide Business
Licence (GBL). It is a compulsory requirement for any corporation holding a GBL to be administered by a
management company duly licensed by the FSC (Administrator). An alike Administrator should be
appointed because the GBL’s company secretary/ registered agent and can be to blame for liaising with
the authorities for the fitting and licensing of the entity. It also has the statutory functions of conducting
know-yourclient procedures on the principals, the beneficial owners and officers of the proposed GBL
and for ensuring ongoing compliance with Mauritius’ laws. Before the application, it is mandatory that
the applicant reserves the proposed names of the entities with the Mauritius Registrar of
Companies/Registrar of Limited Partnerships (Registrar) accompanied by the relevant fee and, if
approved, the proposed name is valid for a period of two months from the date of notice of reservation
of name. In reference to the fitting of the fund in Mauritius, the application for registration is lodged
with the Registrar altogether with applying for a GBL and authorisation to operate as a fund (open-
ended or closed end) with the FSC.

The tax regime are obsessed with the sort of the vehicle and the kind of the fund. The typical vehicle
wont to structure a investment company is a private company limited by shares or a limited partnership,
but a collective investment scheme is normally structured as a public or private company or protected
cell company. an organization or a protected cell company are tax opaque and be taxed in Mauritius. A
limited partnership are tax transparent and thus will not be taxable in Mauritius if it qualifies as a
resident société under the tax Act 1995 (ITA). A limited partnership will meet the factors of a resident
société as understood under the ITA, namely that the seat of the limited partnership is in Mauritius; and
therefore the limited partnership has a minimum of one partner or manager resident in Mauritius. In
addition, a limited partnership holding a GBL may elect not to be tax transparent and rather pay tax in
Mauritius like a company. The common tax regime for GBL limited partnership funds is to adopt a tax
transparent structure.

As a stakeholder the Government’s role is to make the policy to be followed. Another stakeholder is the
Regulatory authority. The FSC may approve a distant manager to manage a fund authorised in
Mauritius. The FSC will consider if the licence of the foreign investment manager is issued by a
regulatory body in an exceedingly jurisdiction having a comparable regulation as Mauritius for investor
protection. In support of the appliance for prior approval, a draft of an investment management
agreement between the fund and foreign investment manager, and evidence of the licensed status of
the manager need to be submitted to the FSC. In addition, the FSC has the facility to recognise such a
fund established in an exceedingly foreign jurisdiction and permit it to work in Mauritius if it's satisfied
that the fund is regulated in its country of domicile. The foreign fund has got to furnish documentary
evidence of its constitution, establishment and good standing within the relevant jurisdiction, including
complete details of the authoritative body having the regulatory and supervisory functions within the
jurisdiction the scheme is established. 3.3 Regulatory Approval Investment funds should be duly
registered with or authorised by the FSC, pursuant to the Securities Act 2005 and the regulations
thereunder to be marketed in Mauritius. In addition, an individual distributing or promoting the fund is
required to be licensed by the FSC and may notify and make a previous submission of promoting
material to the FSC for any marketing. Investors are major stakeholders. The market cannot be said to
be dominated by mainly one type of investor, as we see a diverse range of investors in Mauritius.
However, in recent times, due to Mauritius’ efforts to be compliant with international taxation and
reporting regimes, a lot more institutional investors seem to have gained confidence in using Mauritius.
According to the Financial Action Task Force (the ‘FATF’), MCs are classified as a category of Designated
Non-Financial Businesses and Professions (DNFBPs), i.e. Trust and Company Service Providers (TCSPs).
The new FATF Recommendations provides clearly the obligations of TCSPs. In the Mauritian context, the
FIAMLA, Regulations or guidelines made thereunder and the FSC Code on the Prevention of Money
Laundering and Terrorist Financing (the ‘FSC Code’) set out the duties and obligations of MCs in terms of
the AML/CFT requirements. The FSC as an investigatory body may conduct an investigation on the
premises of the licensees under S44 of the FSA. The FSC has recourse to information and intelligence
from international institutions and foreign regulatory counterparts to assess whether a licensee has
indeed contravened any of its licensing conditions. In addition, Mauritius is a politically stable
jurisdiction with a system of law inspired from English common law and French civil law with a final right
of judicial recourse to the English Privy Council, but at the same time being geographically and culturally
close to countries in Africa and in Asia, making it a preferred platform for establishing holding structures
in emerging markets of these continents. Mauritius is a member of the Southern African Development
Community (SADC), the Indian Ocean Rim Association for Regional Cooperation (IOR-ARC) and the
Common Market for Eastern and Southern Africa (COMESA)
Regulatory Framework

A fund is required to be managed by an investment manager licensed as a CIS Manager by the FSC. The
fund where it's constituted as a corporation is also self-managed (ie, managed by its board of directors),
with the approval of the FSC; however, within the case where the fund holds a GBL, it's hospitable this
fund to appoint an overseas manager, subject to the approval of the FSC. An application for a licence of
a CIS manager is to be made in the prescribed form to the FSC, and must be accompanied by documents
such as: • the governing documents of the CIS manager; • a code of ethical principles to manipulate it; •
an internal procedures manual, which should also contain contingency planning and disaster recovery; •
the anti-money laundering framework; • a conflict of interest policy; and • credentials of the principals,
CVs and therefore the prescribed personal questionnaire and normal KYC information. On submission of
the applying pack, the FSC takes around approximately four weeks to contemplate the applying and may
raise queries and request for clarifications. A CIS manager is required to suits certain conditions, which
include: • it has got to be a body corporate; • it has got to be principally engaged within the business of
managing funds (or pension schemes); • it has got to maintain a minimum stated unimpaired capital of a
minimum of MUR1 million or a similar amount; • to put off professional indemnity insurance in respect
of fraud and professional breaches and negligence; • to have in situ an affordable written policy to cater
for conflict of interest, code of ethics and conduct and rules of internal control; • the manager has got to
suits prescribed duties and functions, for instance: (a) act within the best interests of the participants
within the scheme and, where there's a conflict between the interest of the participants and their own
interests, give priority to the participants’ interests; (iii) exercise the degree of care and diligence that
would be reasonably expected of an individual in that position; (iv) make sure that the assets of a
scheme are clearly identified and held separately from the assets of the CIS manager and therefore the
assets of the other scheme managed by the CIS manager; and (b) not make use of data acquired through
being MAURITIUS Law and Practice 10 a manager to achieve an improper advantage or cause detriment
to the participants within the scheme. (c) To be a self-managed fund, the approval of the FSC is
required. Self-management entails the board of directors of the fund performing the functions of a
CIS manager which such directors are jointly bound and responsible to perform the functions of the
CIS manager