Your guide to becoming a tax resident in Mauritius
Located at the heart of the Indian Ocean, Mauritius is an appealing destination for foreign entrepreneurs, especially regarding taxes. Thanks to its favorable tax regime and financial framework, this island of 2,040 km² offers an environment conducive to tax optimization while providing an exceptional quality of life. Magellan explains the key steps for becoming a tax resident in Mauritius and taking full advantage of its assets.
Tax benefits in Mauritius
Mauritius offers several tax benefits for foreign entrepreneurs, including the following:
- A corporate tax rate of 15%;
- Total exemption from customs duties on imports;
- No withholding tax on dividends, interest and royalties paid to non-residents;
- The option of specific legal structures, such as Global Business Companies (GBCs), for further tax optimization.
Through these arrangements, foreign investors in Mauritius are able to benefit from low taxation as well as tax optimization.
Procedures for becoming a tax resident in Mauritius
To switch your tax residence to Mauritius as a foreign entrepreneur, here are the main steps to follow:
- Set up a business in Mauritius: You can create a local company or a GBC, depending on your business needs and objectives.
- Obtain an Occupation Permit (OP): This work and residence permit is required for setting up a business in Mauritius as a foreign entrepreneur. It is valid for 3 years and can be renewed.
- Open a local bank account: Opening a Mauritian bank account is essential for managing your company’s financial transactions.
- Transfer your assets and income: To benefit from local tax incentives, you will need to transfer your assets and income to Mauritius.
- Reside in Mauritius for at least 183 days a year: To qualify as a Mauritian tax resident, you must stay in the country for at least 183 days per tax year.
By following these steps, you can effectively switch your tax residence to Mauritius.
Tax considerations when settling in Mauritius
Choosing Mauritius as your tax residence also has inevitable consequences. Here’s what you need to consider:
- Double taxation: Although Mauritius has signed tax treaties with 46 countries to date, it is essential to check whether your home country applies double taxation.
- Tax obligations: As a Mauritian tax resident, you must comply with local obligations concerning your worldwide income. In short, all your income, regardless of their sources, must be declared.
- Vigilance about harmful practices: International tax authorities are increasingly attentive to tax avoidance and optimization practices. It is, therefore, essential to comply with existing regulations to avoid possible sanctions.
Financial benefits of settling in Mauritius
In addition to its tax incentives, Mauritius also offers a favorable economic environment for foreign entrepreneurs, including the following:
- A skilled and competitive workforce
- A stable and transparent legal framework;
- Modern, high-performance infrastructure;
- Privileged access to African and Asian markets.
These advantages make Mauritius a prime destination for growing your business internationally.
Potential challenges and how to overcome them
Despite its various features and benefits, Mauritius can present particular challenges for foreign entrepreneurs settling here, for example:
- Geographical distance: Since Mauritius is an island, traveling to other countries can be quite time-consuming and costly.
- Cultural integration: Understanding and adapting to the local culture is essential for integration as a foreigner.
- Compliance with local regulations: As mentioned above, complying with Mauritian tax laws and legal obligations is crucial.
To overcome these challenges, take the time to plan your move properly. You can also rely on local experts to support your business endeavors. Magellan has a team of experts who can help you, from choosing your business type and structure to settling in Mauritius.
As a foreign entrepreneur, switching your tax residence to Mauritius offers undeniable benefits. By following the proper procedures and considering the potential consequences of your choices, you will open the doors to a thriving economy that has become one of the top destinations for investment in the past decades. Contact us now to get started!