At Tax Free Today, we’ve already talked about a lot very interesting countries to emigrate to. As well as the most popular solutions like Panama, Cyprus, Paraguay or the UAE, others also choose less popular, but just as convenient, options, such as Costa Rica, the Philippines, Bulgaria or Georgia.
They all combine tax exemption for investors and business owners who are not tied down to any single place with a high quality of life and comparatively simple conditions for immigration. Not many jurisdictions offer such a balance.
With 206 fiscally autonomous jurisdictions, there are still many other great treasures we haven’t yet written about. In fact, there are more than 80 tax-free countries in the world, of which almost half are appealing enough for someone to dare to try them out (by the way, you can read about them in our new ebook).
Today we’re going to talk to you about an island state. And, no, we don’t mean the Dominican Republic (which will get its own article in due course), but the world’s wealthiest African nation: Mauritius.
The island of Mauritius is located in the Indian Ocean, east of Madagascar near the French overseas territory of Reunion, and has an Anglo-French colonial past. The official language of this country of nearly 1.4 million inhabitants is English. Mauritius is made up of a 2000km² main island and several smaller ones.
Among African countries, Mauritius is in many respects somewhat of a leader. The country barely has any corruption, inflation in Mauritian rupees is low (€1 = 40 MUR) and the population is the wealthiest in Africa.
In Freedom House’s Freedom Index, Mauritius occupies 15th place in the world and shares, with Seychelles, the highest Human Development rank in Africa (0.781 over 1)
The multicultural island is known for its excellent ties with India, as most of the population is from there and Hinduism is its biggest religious group, around 48%. But, Christians (approx. 33% and Muslims (approx. 17%) also feature on an island which, thanks to its size and mountainous regions does not just offer a hot, tropical climate.
But why is Mauritius such a great discovery?
Well, on top of offering excellent air connections with Europe, it stands out for having a relatively simple immigration process, combined with quite an interesting and attractive tax system, and not just for online business owners.
Ah, an important piece of info for homeschoolers: school attendance is only compulsory in primary school. Furthermore, this does not apply to foreigners.
Mauritius’ tax system
Mauritius is the Malta of the Indian Ocean, at least with respect to its tax system.
As an English colony, Mauritius has a non-dom tax system based on the money that is brought into the country (remittance base). The system in Mauritius is similar to that in Malta.
Non-dom means ‘non-domiciled’ and describes a status in English common law.
A person’s domicile is usually in the country where their father comes from, and where they have lived for most of their life. Generally, but not always, this is the country of nationality.
In general, you do not lose your original domicile until you give up your nationality, or after 17 years without stepping foot in which you were domiciled.
Anyone who is not domiciled, but resides in a country with a non-dom system, can benefit from a special form of taxation, based on money transferred or received (remittance base).
According to this system, foreign income is exempt from tax as long as it is not used in the country.
Contrary to popular belief, this concerns not only transfers to the country, but also, in general, any cash or other money (cash withdrawals or credit card payments) used or deposited in the country.
As a result, non-doms are never completely exempt from paying tax (except in the Cyprus non-dom scheme, which operates differently). They’ll always have to pay tax on money brought into the country to cover the cost of living, and this cost must be credible.
In any case, foreign income or investments used in foreign travel is not taxable.
Tax residence in Mauritius is based on the 183 day rule. Spending 270 days there over 3 years is enough to get a tax certificate. This will be necessary, for example, to be able to benefit from Mauritius’ excellent network of double taxation agreements, which can be extremely advantageous, especially for investors.
Mauritius is particularly interesting for investors and traders of all kinds due to its unconditional tax exemption on capital gains.
Cryptocurrencies are legal there, but are largely unregulated, which offers even better conditions.
Mauritius is especially well known for its double taxation agreement with India, but also for its 45 other DTAs, which is unusual in a low-tax country.
Double taxation agreements with Germany, France and Sweden reduce taxes at source by about 15% (shares) and 5% (holdings in companies over 10%). Here you can find a list of all the double taxation agreements signed.
Income tax on domestic and foreign income used or brought into the country is at a fixed rate of 15%.
Employees’ social security contributions are quite affordable: the employee gives 4% of their gross salary and the employer 8.5%.
The tax-exempt amount depends on the number of family members and is approximately €7,000 for one person and €12,500 for a family of four. There is no inheritance tax.
Mauritius as a haven for business owners
Domestic dividends are not taxed either, which makes setting up a business in Mauritius very appealing. Here a distinction must be made between the two categories of company: GBC1 and GBC2.
Global Business Company 2 is a classic offshore company, which cannot do business in Mauritius. It’s a tax-free company with no obligation to file accounting and anonymous. It combines the advantages of a typical offshore jurisdiction with some country-specific prerogatives.
Mauritius enjoys a better reputation than other comparable jurisdictions and is on the OECD’s white list. Mauritius, for example, is one of the few potentially tax-free countries that Amazon approves for sale via FBA in Europe.
Mauritius is also very interesting for business owners who need to be able to receive bank transfers in a company bank account located in the same country as the company head office.
In many offshore jurisdictions it is almost impossible to open a bank account in a local bank, but in Mauritius it’s usually a lot easier to open a bank account, even remotely.
In addition, Mauritius is one of the few non-European countries with an IBAN, which greatly simplifies payment transactions with (remember that we offer the opportunity to open a remote account in Georgia, another country that also allows you to use an IBAN and does not apply the exchange of banking of information).
The most popular banks for offshore companies are Bank One and ABC-Bank South African Standard Bank and Standard Chartered Bank, which operate globally, are also recommended.
Anyone who emigrates to Mauritius and conducts business from there or is interested in a company with internationally-recognised low taxes, also to issue invoices, should turn to the GBC1.
Global Business Company 1 requires two directors resident in Mauritius (regardless of nationality) in order to take advantage of the excellent double taxation agreements, making it an interesting investment company.
Corporation tax for foreign income is only 3%. Only domestic income is taxed at 15%.
Since dividends distributed by the GBC1 to shareholders resident in Mauritius are exempt from tax (there is also no dividend withholding in the case of non-residents), the total tax burden for business owners is a ludicrous 3%.
Private foreign investments by residents in Mauritius would be tax-exempt thanks to non-dom taxation (as long as the money is not brought into the country).
It is also worth mentioning that Mauritius offers excellent opportunities for getting a relatively inexpensive licence to provide financial services or to operate with cryptocurrencies. The costs of creation, including the licence, are here just €15,000.
How to move to Mauritius – on the different immigration options in Mauritius
In many countries living conditions and taxation conditions seem to be perfect, but then, when we look at their immigration laws we see that everything stops there. It’s not like that in Mauritius.
Mauritius is interested in attracting skilled immigrants to the country and broadly offers four different options for immigration. Citizens of almost all nations (except some Muslim countries) can enter the country for the first time without needing a visa and stay 2 or 3 months.
Employees get a residence permit in Mauritius as soon as they can prove they have a job offer for the equivalent of €2,000 monthly income. For experts in the field of computer science the threshold is reduced to half, just €1,000.
Employers must first invest $35,000 in their GBC1, earning at least $20,000 during the first two years and $40,000 from the third year onwards in order to obtain a residence permit.
An investor visa will be granted from an investment of $10,000. Profits of approximately $75,000 should be obtained in the first year and approximately $300,000 in the following years.
Finally, people over 50 can get a pensioner visa if they bring at least $40,000 a year into Mauritius over 3 years, make a $15,000 deposit in a local bank and pay a fee of $2,500.
In the four cases, after three years of residence of at least three months, Mauritius grants a permanent residence permit, which must be formally renewed every 10 years.
After seven years you can obtain Mauritian citizenship, as long as you’ve lived in Mauritius for at least five years. You have to have spent the last 12 months in Mauritius prior to applying for citizenship.
Among 145 visa-free countries, Mauritius ranks 28th in the world and offers a greater freedom of movement than typical Caribbean Economic Citizenship programmes.
Since Mauritius accepts dual citizenship, it complements our main passport nicely, as it allows free movement through Africa, granting visa-free access to several countries in southern Africa that are generally difficult to get into.
For whom is residence in Mauritius an interesting option?
So far most business owners have overlooked Mauritius. Mauritius does not offer territorial taxes but an attractive non-dom taxation system in which business owners with foreign income pay just 3% tax and get in return a company with a good reputation, recognised practically worldwide.
The initial requirements for company registration (an initial investment of $35,000 in the company) are higher than in the typical destinations we have been talking about at Tax Free Today, but, depending on the case, it is still interesting, especially considering the subsequent tax savings.
Furthermore, with a similar non-dom system to the one in Malta, foreign investments from Mauritius remain tax-free. Ultimately, with a company in Mauritius, bringing foreign income into the country is not necessary, and you can live on the dividends from the local company (local dividends which, remember, are tax-free).
Thanks to its excellent double taxation agreements, Mauritius is to a large extent the preferred residence of entrepreneurs and investors with commercial ties to India.
But even if you don’t do business with India, the Global Business Company 1 can meet the needs of practically any entrepreneur. With a total tax burden of 3% we can meet all the needs for recognition of our invoices and opening bank accounts anywhere in the world.
In the end, Mauritius is one of the most attractive of the non-dom countries. What makes it more interesting for business owners is without a doubt its corporate taxes on foreign income with a domestic company of 3%, coupled with the freedom of taxation on dividends (on the profits of that domestic company). For traders and investors it is the complete exemption from tax on capital gains.
If you are interested in becoming resident in Mauritius, do not hesitate to get in touch. Should you first want to read about other interesting countries and jurisdictions in which to live, take a look at our new ebook, you may find there the perfect place to live in.