Category 1 Global Business Licence (GBC 1)
The GBL 1 shall henceforth be renamed as Global Business Licence. Global Business Companies will be required to comply with enhanced substance conditions.
Category 2 Global Business Licence (GBC 2)
The Financial Services Commission (“FSC”) will cease to issue GBC 2 licences as from January 2019 while the current regime will continue to apply until 30 June 2021 for companies which have been issued a licence prior to 16 October 2017.
All resident companies and partnerships incorporated/registered under the laws of Mauritius whose majority shareholdings/parts are held by non-resident and which conduct business mostly outside Mauritius will be required to seek a Global Business Licence or an authorisation from the FSC, through a duly appointed Management Company (“MC”). The MC will be responsible for Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT), Legal, Regulatory & Corporate Governance compliance of these companies/partnerships.
Reforms in the taxation regime
A partial exemption regime will replace the deemed foreign tax credit system as from 1 January 2019 and will be implemented whereby all GBC 1s, subject to satisfying pre-defined substantial activities requirements imposed by the FSC, will be granted an income tax exemption at the rate of 80% on the following income:
- Foreign source dividends and profits attributable to a foreign permanent establishment;
- Interest and royalties; and
- Income derived from provision of specified financial services.
Profits derived from global trading activities will be taxed at a reduced rate of 3%.
Where partial exemption is not available, the GBC1 will benefit from the current foreign tax credit system (for taxes suffered on foreign source income) in respect relief of double taxation.
Consequential amendments will be made to sections in other legislations relating to companies namely, the Income Tax Act, Companies Act, Foundations Act, Insurance Act, Limited Liability Partnership Act, Limited Partnerships Act, Private Pension Schemes Act, Non-Citizens (Property Restriction) Act, Protected Cell Companies Act, Securities Act, and Trusts Act.
The proposed measures aim at a harmonizing the fiscal regime for domestic and Global Business Companies (“GBC”). The changes will be promulgated once the Finance Act is passed in Parliament
Furthermore, clarity is awaited from the authorities on:
- The enhanced substance conditions which will vary based on the operations of the company;
- Whether the current Corporate Social Responsibility requirements which is currently imposed on domestic companies will be applicable to the companies with a GBC, given the alignment of GBC 1 to domestic entities