Real Estate Investor Magazine South Africa May/June 2019 | Page 59

These positive shifts in recognition can be attributed to various
initiatives that Mauritius has implemented over the last few
years in order to address its perceived harmful tax practices.
The following changes to Mauritius' domestic laws are
noteworthy:
•
•
From 1 January 2019, there shall be no Global Business
Licence 1 or Global Business Licence 2 licenses issued
by the Financial Services Commission (FSC) - instead
there will be a single licensing regime applies, known
as the Global Business Licence (GBL). There is a
grandfathering provision that allows previously licensed
GBL1 and GBL2 entities incorporated on or before 16
October 2017 to operate under the previous licensing
regime and to retain their tax status and benefits until
30 June 2021. This change is aimed at removing certain
exceptions that were previously specific to GBL1 and
GBL2 companies. Any person who is not a citizen
of Mauritius may no longer do business outside of
Mauritius through a Mauritian domestic resident
corporation – it will be obliged instead to have a GBL.
The FSC has introduced enhanced substance
requirements for the GBL with effect from 1 January
2019, pursuant to which a GBL holder (a GBC)
must at all times carry out its core income generating
activities in, or from, Mauritius by employing a
reasonable number of suitably qualified persons to
carry out the core activities; and have a minimum level
of expenditure, which is proportionate to its level of
activities. When determining compliance with these
requirements, the FSC will make each assessment on a
case-by-case basis looking at the specific circumstances
of the GBC. From the indicative guidelines, however,
it can be assumed that a fund manager with USD 500
million under management must employ a minimum
of three suitably qualified people in its Mauritian office
and have a minimum expenditure of USD 30,000 per
annum. With respect to licensees that are part of a
group, the FSC will assess the new enhanced substance
requirements at group level.
•
The deemed foreign tax credit mechanism has been
discontinued. Unless specifically exempt or eligible for
Partial Exemption, the foreign source income of each
GBC (i.e. income not derived from Mauritius) will
be taxable at the standard corporate tax rate of 15%.
The Partial Exemption applies to specified financial
services and, subject to compliance with the substance
requirements above, operates to exempt 80% of foreign
income derived by a collective investment scheme (CIS),
closed-end fund, CIS Manager, CIS administrator,
investment manager or asset manager licensed or
approved by the FSC.
The legislative safeguards which have been introduced into
Mauritian law have certainly gone a long way in addressing
Mauritius’ detractors. The challenge for Mauritius, however,
will be to ensure that such legislative changes do not erode its
competitiveness.
Fund managers establishing their funds in Mauritius will
need to bear in mind that any GBC must be centrally managed
and controlled from Mauritius, with a minimum expenditure
proportionate to its level of core generating activities and the
minimum number of staff required to properly conduct such
activities. The Mauritian Central Management and Control test
is not aligned with the internationally understood test and fund
managers will need to ensure that all indicative factors are taken
into account.
RESOURCES
Partners at Webber Wentzel
SA Real Estate Investor Magazine MAY/JUNE 2019
57