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Problems to setup business in Mauritius

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Problems to setup business in Mauritius

Mauritius (Problems to setup business in Mauritius), which is officially known as The Republic of Mauritius, is an island located about 2,000 km off the coast of Africa in the Indian Ocean. It is a popular tourist destination famed for its sandy white beaches.

The country used to depend on agriculture mainly sugar plantation and tourism to support its economy. However recently it has managed to improve tremendously from a low income nation to an upper middle income economy with a per Capita GDP of USD 9,600 in 2016 as compared to USD 260 in the 1970’s. This is largely due to the addition of manufacturing of textiles and apparel; IT related activities and financial services.

Mauritius is also an attractive destination for businesses looking to set up companies to take advantage of its low corporate tax rate. Coupled with a stable political environment, it has encouraged more businesses to set up companies in the country.

Types of companies and its advantages

There are many types of companies that you can set up in Mauritius. They are-

  • Global Business Companies 1 (GBC 1) – This type of company is also known as a resident company. It is set up mainly to take advantage of the low corporate tax rate in the country. This type of company can also do business with other local Mauritian companies or its residents such as financial or insurance services provided that they obtain the necessary approvals and permits to conduct the business.
  • Global Business Companies 2 (GBC 2) – GBC 2 are considered as foreign companies or offshore companies. This type of companies mainly conducts their business dealings outside of Mauritius. The main purpose of setting up a GBC 2 company is also for tax purposes as they are not subject to the country’s corporate tax.
  • Limited liability Company – This Company must have at least 1 director of any nationality or country of residence.
  • Branch company – Branch offices of a foreign owned company is allowed to be opened but must it must be with 1 resident representative and a registered office in that particular country.

For a full list of the types of companies that you can set up in Mauritius, please follow this link taken from the Mauritius Chamber of Commerce and Industry –

Advantage of setting up a company in Mauritius

According to a World Bank report in 2016, Mauritius is ranked as 49th out of 189 countries for its Ease in Doing Business. Other advantage of setting up a company in Mauritius include-

  • Mauritius is a fantastic location to set up a holding company particularly if you are doing business with companies in Africa. This is mainly because of its proximity to the African continent and stable political environment. However the most compelling reason is due to the tax advantage that the company can benefit.
  • A GBC 2 company doesn’t need to disclose its shareholders, owners or directors making confidentiality a plus point.
  • A relatively fast and simple process to setting up a company in the country. It only takes about 3 days to incorporate a company.
  • There is no minimum paid up capital for a GBC 2 company.
  • A GBC 2 company doesn’t have to prepare and submit a set of accounts.
  • A relatively low cost to set up a company.

Problems/challenges in setting up a business

There is bound to be problems or challenges associated with setting up a business. More so if it’s in another country. Here are some of the challenges and possible solutions-

  • Mauritius being a tax haven can also be a challenge as companies that are set up there can invite unwanted inspection and checking from tax authorities and banks.
  • Improvement to infrastructure – Although it has about 1,800 km of tarred road out of a total of 1,930 km, there is still room to improve. With the ever increasing rise in tourism, this can lead to a potential congestion.
  • Ageing population – Mauritius has a population of only 1.3 million persons (July 2016 est.). Out of this, people from age 25-54 makes up 43.8% of the population and from age 55-65 and over makes up about 20% of the population. Coupled with a relatively low birth rate of 13.1 per 1,000, the population is seen to be ageing.
  • Shortage of a skilled labor force – This is particularly true for the newer industries such as IT, telecommunication, medical and other specialized sectors.
  • Restrictions in the employment law – The labor laws in Mauritius can be intricate and companies are suggested to employ highly capable and qualified human resource staff.
  • For companies that are involved in the construction industry, the time frame to apply for a construction permit can be time consuming. Due to environmental concerns, there are a few government agencies that need to be consulted and the necessary approvals obtained before any work can be started.

Conclusion

Although there are some problems to setup business in Mauritius and challenges in , the benefits far outweigh the setbacks.

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