How to Set Up a Subsidiary Company in Mauritius?

Setting up a subsidiary company in Mauritius involves creating a legally independent entity fully owned by a foreign parent company. Mauritius is an attractive destination for businesses due to its stable political environment, pro-business policies, and access to regional and international markets, particularly through favorable trade agreements.

This blog will cover the key steps to establish a subsidiary in Mauritius, including legal requirements, registration procedures, tax obligations, compliance needs, and tips for a successful setup.

Key Takeaways

• Legal Structure and Ownership: Choose between Global Business Companies (GBC1 or GBC2) or Domestic Companies (such as a Private Limited Company). Full foreign ownership is allowed, with flexible management options.
• Incorporation Essentials: Prepare notarized Articles of Association, register with the Registrar of Companies, obtain a Business Registration Number (BRN), and secure a physical office address for your subsidiary in Mauritius.
• Annual Compliance Requirements: Subsidiaries in Mauritius must file audited financial statements following local standards, submit tax returns to the Mauritius Revenue Authority (MRA), and register employees with the National Pension Fund (NPF).

What are the Types of Subsidiaries in Mauritius?

Understanding how to establish a subsidiary company in Mauritius involves selecting the appropriate structure, which determines the level of control, legal responsibilities, and the type of activities the entity can undertake. Foreign investors can choose from several structures based on ownership, control, and business objectives. The main types include:

Private Limited Company (Ltd)

A Private Limited Company (Ltd) is the most common subsidiary structure, allowing 100% foreign ownership and limited liability. It can have up to 50 shareholders and one or more directors. It is ideal for small to medium businesses seeking operational flexibility while minimizing liability.

Global Business Company (GBC1)

GBC1 is for international businesses seeking tax benefits. It enjoys a 15% tax rate on foreign income and benefits from Mauritius’ double taxation treaties. It is ideal for companies in international trade, finance, or investment.

Global Business Company (GBC2)

GBC2 is simpler than GBC1, with no requirement for tax treaty benefits. As a result, it is unable to qualify for double taxation treaty relief. A GBC2 is suited for trading, holding, and managing private assets and may not engage in certain authorised activities such as financial services.

Branch Office

A Branch Office is an extension of the parent company, without a separate legal status. It is directly controlled by the parent company, which bears full liability for the branch’s operations. It is easier to set up than a subsidiary, but it lacks liability protection.

Representative Office

A representative office in Mauritius can perform marketing, research, and liaison activities, but is not allowed to carry out commercial transactions or generate revenue. It’s usually a preliminary step before establishing a full subsidiary.

Step-by-Step Guide to Setting Up a Subsidiary in Mauritius

Opening a subsidiary in Mauritius involves several legal and administrative procedures. Below is a step-by-step guide outlining the key stages to successfully establish and register your subsidiary:

Step 1: Choose the Appropriate Business Structure

Decide whether your subsidiary will be a Private Limited Company (Ltd) or a Global Business Company (GBC1 or GBC2). The choice depends on the business activities, tax considerations, and whether you need international tax treaty benefits.

Step 2: Reserve the Company Name

Check the availability of your desired company name through the Corporate and Business Registration Department (CBRD). This is also known as the Registrar of Companies. The name must be unique and comply with local naming conventions. Once approved, the name is reserved for your company registration.

Step 3: Prepare and Notarize Incorporation Documents

Draft the Articles of Association and other required business incorporation documents, which outline the company’s purpose, capital structure, management, and shareholders. These documents must be signed and notarized by a public notary in Mauritius.

Step 4: Register with the National Registry of Commerce

Submit the notarized incorporation documents to the Registrar of Companies for formal registration. After registration, your subsidiary will gain legal status and be listed in the commercial registry.

Step 5: Obtain a Tax Identification Number (RUT)

Register the subsidiary with the Mauritius Revenue Authority (MRA) to obtain a Business Registration Number (BRN). This number is necessary for all tax-related matters and is required to start conducting business in Mauritius.

Step 6: Open a Local Bank Account

Choose a reputable bank in Mauritius to open a corporate bank account. This account will be used for depositing your registered capital and managing day-to-day business financial transactions.

Step 7: Register Employees, Obtain Licenses, and Ensure Ongoing Compliance

When hiring employees, register with the National Pension Scheme and ensure compliance with local labor laws, including contracts and employee benefits. Obtain any sector-specific licenses or permits that are required for your business activities. Maintain ongoing compliance by keeping accurate accounting records, submitting annual tax returns, and ensuring timely tax payments to avoid penalties.

Key Benefits of Establishing a Subsidiary in Mauritius

Setting up a subsidiary company in Mauritius offers key strategic and operational advantages for foreign investors. With its open investment policies and strong regional trade ties, Mauritius has become a prime destination for international businesses. The following are the main advantages:

• Stable Market: Mauritius offers a stable political and economic environment, with access to markets in Africa, Asia, and Europe.
• Strategic Location: Positioned between Africa, Asia, and Australia, Mauritius serves as a hub for regional trade and logistics.
• Tax Incentives: The government provides tax benefits, including reduced tax rates and exemptions, especially for global businesses in sectors like finance and tech.

Essential Documents for Registering a Subsidiary

If you’re researching how to form a subsidiary in Mauritius, preparing the correct documentation is a critical step in the process. Local authorities require a detailed set of legal and corporate documents to approve foreign-invested enterprises. Below is a list of the essential paperwork you’ll need:

• Company Name Reservation: A request for name reservation through the Registrar of Companies to ensure the proposed name is unique and compliant with local regulations.
• Articles of Association: The company’s governing document, outlining its purpose, structure, capital, management, and shareholder details.
• Proof of Identity for Shareholders and Directors: Copies of valid identification (passport or national ID) for all shareholders and directors.
• Business Registration Number (BRN): A unique number issued by the MRA after registering the business for tax purposes.
• Registered Office Address: Proof of a local physical address for the company’s official correspondence.
• Share Capital Documentation: Details of the share capital, including proof of deposit if applicable, to meet minimum capital requirements.
• Tax Forms: Completed registration forms for Corporate Income Tax (CIT), VAT (if applicable), and National Pension Scheme (NPS) registration with the relevant authorities.
• Directors and Shareholder Agreement (if applicable): Documentation outlining the relationship between the company’s shareholders and directors, including any agreements on management or profit-sharing.

Note: If you are not sure about setting up a subsidiary company in Mauritius, it’s advisable to work with a local legal expert to ensure accuracy and full compliance.

Legal Structures Available for Subsidiaries in Mauritius

When considering setting up a subsidiary company in Mauritius, it’s essential to choose the right legal structure. The type of entity you register affects your ownership rights and liability. In Mauritius, foreign investors typically establish subsidiaries under one of the following legal structures:

• Private Limited Company (Ltd): A widely-used structure allowing 100% foreign ownership and limited liability. It’s ideal for small to medium-sized businesses.
• Global Business Company (GBC1): A tax-efficient structure for international businesses, offering benefits like a reduced tax rate on foreign income and access to double taxation treaties.
• Global Business Company (GBC2): Designed for simpler operations, often used for holding companies, with fewer compliance requirements and no access to tax treaties.
• Branch Office: A direct extension of the parent company, allowing for a simpler setup, but with full liability for the parent.
• Representative Office: A non-commercial entity used for research, marketing, and liaison work, without the ability to generate revenue.

Note: For most foreign investors who are looking at how to create a subsidiary in Mauritius, the GBC 1 is the preferred choice as it offers a competitive tax rate.

Taxation Rules and Incentives for Subsidiaries

Understanding Mauritius’s tax system is essential when planning how to set up a parent company with subsidiaries in Mauritius. The country offers a competitive corporate tax regime along with attractive incentives to encourage foreign investment.

Here’s an overview of the taxation rules and benefits for foreign-invested subsidiaries:

Corporate Income Tax (CIT)

Mauritius operates on a territorial tax system, meaning that only income generated within the country is subject to corporate income tax. The standard corporate income tax rate is 15%. However, companies engaged in the export of goods benefit from a reduced tax rate of 3% on income derived from export activities, provided certain conditions are met.

Tax Incentives for Foreign-Invested Subsidiaries

To attract foreign investment, Mauritius offers various tax incentives:

• Investment Tax Credit: Manufacturing companies that invest in artificial intelligence and patents can claim a 15% tax credit over a three-year period.
• Tax Exemptions: Income from the sale of virtual assets and tokens is 100% exempt from income tax.
• Freeport Operators: Newly established freeport operators may benefit from an eight-year tax holiday, subject to meeting certain conditions.

Tax Compliance

Subsidiaries must register for tax purposes with the MRA and obtain a TIN. Annual tax returns must be filed within six months of the company’s financial year-end. Quarterly advance tax payments are required under the Advance Payment System (APS).

Regulatory and Compliance Requirements in Mauritius

Whether you’re setting up a subsidiary company in Mauritius or exploring how to start a parent company in Mauritius, understanding ongoing compliance is critical. Businesses must meet legal, tax, and reporting obligations to operate smoothly and avoid penalties. The following are the key compliance requirements:

• Corporate Governance: Subsidiaries must maintain accurate corporate records, including board and shareholder meeting minutes, and comply with the National Code of Corporate Governance.
• Tax Registration and Filing: Subsidiaries must register with the MRA, obtain a TIN, file annual corporate income tax returns, and make quarterly advance tax payments under the APS.
• Accounting Standards: Subsidiaries must maintain accounting records in accordance with International Financial Reporting Standards (IFRS) and may need to have their financial statements audited depending on the size and sector of the company.
• Labor and Social Security Compliance: Companies must register employees with the National Pension Fund (NPF) and National Savings Fund (NSF), comply with labor laws, and ensure social security contributions are made.
• Reporting Changes: Any changes to company details, such as capital structure, shareholders, or registered address, must be promptly reported to the Registrar of Companies.

Note: Post-incorporation in Mauritius, subsidiaries must register for CIT, file annual returns, and make quarterly tax payments. They must comply with IFRS, and depending on the company size, may require audits. Subsidiaries must also adhere to labor laws, register employees with the NPF and NSF, and ensure that social security contributions are made.

Do You Need a Physical Address for a Subsidiary in Mauritius?

Yes, a physical address is required when setting up a subsidiary company in Mauritius. A subsidiary must have a registered office with a physical address, not a P.O. box. This can be a commercial office space or the address of a licensed corporate services provider. It is required for legal and official correspondence. The registered office ensures compliance with local regulations and facilitates communication with authorities.

Operational Setup for a Subsidiary in Mauritius

Setting up a subsidiary in Mauritius requires careful attention to operational details to ensure legal compliance and efficient business functioning. Key areas include staffing, office establishment, financial management, and obtaining necessary licenses. Here’s a concise overview of the essential operational setup steps:

1. Staffing: Subsidiaries must hire local or foreign employees, comply with Mauritian labor laws, and register employees with the NPF and NSF.
2. Office Setup: A physical registered office is required, and additional office space can be rented in business hubs like Cybercity in Ebene.
3. Operational Considerations: Subsidiaries must register for CIT with the MRA, adhere to IFRS for accounting, and be aware of local tax incentives.

How to Open a Business Bank Account for a Subsidiary in Mauritius?

Opening a bank account is essential when setting up a subsidiary company in Mauritius. It allows for capital contributions, daily transactions, and tax compliance. Here are the key steps:

1. Select a bank: Choose a bank that aligns with your business needs. Major banks in Mauritius include the Mauritius Commercial Bank (MCB), State Bank of Mauritius (SBM), HSBC, and Bank One.
2. Prepare required documents: Gather necessary documents, including the Certificate of Incorporation, Memorandum & Articles of Association, Taxpayer Identification Number (TIN), proof of the parent company’s capital contribution, legal representative’s passport or ID, and proof of address for directors and shareholders.
3. Visit the bank: The legal representative (or authorized person) must open the account in person.
4. Submit documents and open the account: Provide all required paperwork to the bank officer.
5. Deposit Initial Capital: Some banks require an initial deposit or proof of capital contribution from the parent company to activate the account.
6. Account Activation and Use: Once approved, the bank will open the account, enabling the subsidiary to manage transactions, capital transfers, payroll, and tax payments.

Is an Operating Agreement Necessary for a Subsidiary in Mauritius?

In Mauritius, an Operating Agreement is not required. Instead, the Memorandum and Articles of Association (M&AA) govern the subsidiary, outlining its structure, ownership, management, and rules. This document is essential for incorporation and helps define shareholder rights and decision-making processes.

Opening a Branch vs. a Subsidiary: What’s the Difference?

When expanding into Mauritius, foreign companies can choose between establishing a subsidiary or opening a branch office. Both structures allow a business presence, but they differ significantly in terms of legal status. Here is a concise comparison table outlining the key differences between the two:

How Commenda Can Help You Expand in Mauritius

Setting up a business in Mauritius involves understanding the legal, tax, and operational requirements. Handling these complexities can be overwhelming and time-intensive without the right local expertise and support. Commenda provides comprehensive support to ensure a smooth, compliant, and strategic market entry.

With deep local expertise, Commenda assists with every step of incorporation, from choosing the proper business structure to securing investment licenses and completing company registration. We help ensure your subsidiary or parent company is established correctly under the laws of Mauritius.

Our team also provides ongoing compliance, payroll, and legal support to ensure your operations run smoothly.

Book a demo today to see how Commenda can simplify your expansion into Mauritius.

FAQs

Q. How much does it cost to set up a subsidiary in Mauritius?

Setting up a subsidiary in Mauritius involves various costs, which can vary based on the type of company and services required. Here’s a concise overview:

• Business Company
  • 1st Year: USD 2,000 to 7,500 (incorporation) + USD 2,750 (government fees).
  • Ongoing: USD 2,250 to 4,500 (annual fees).
• Authorized Company
  • 1st Year: USD 750 to 5,000 (incorporation) + USD 600 (government fees).
  • Ongoing: USD 450 to 3,500 (annual fees).

Additional costs include director fees (USD 1,500 to 6,500) and accounting (USD 500 to 1,000).

Q. How long does it take to register a subsidiary in Mauritius?

Businesses in Mauritius are registered under the Business Registration Act 2002, with the process typically taking half a day. Registration applies to any business operating in Mauritius and Rodrigues and can be completed online or by submitting the required documents to the Registrar of Companies.

Q. Can a foreigner fully own a subsidiary in Mauritius?

Yes, foreigners can fully own subsidiaries in most sectors. Mauritius allows complete foreign ownership with no restrictions in many industries, making it an attractive destination for foreign investors.

Q. What are the common challenges when opening a subsidiary in Mauritius?

Common challenges include navigating bureaucracy, meeting document legalization requirements, language barriers, delays in government approvals, and understanding local labor and tax compliance laws. Having local legal support helps avoid costly mistakes.

Q. Do subsidiaries in Mauritius need a local director or representative?

While there is no strict requirement for a local director, subsidiaries must appoint a legal representative who is authorized to act on behalf of the company. This person does not need to be a resident of Mauritius, but should be accessible for official matters.

Q. What are the annual compliance requirements for subsidiaries in Mauritius?

Subsidiaries must file annual financial statements, corporate income tax returns, VAT filings, and social security contributions if they have employees. Maintaining proper accounting records in compliance with the Mauritius standards is mandatory.

Q. Can a subsidiary hire employees directly in Mauritius?

Yes, subsidiaries can hire employees directly and must comply with Mauritius labor laws, including employment contracts, social security registration, payroll management, and workplace safety regulations.

Q. What happens if a subsidiary fails to meet compliance rules in Mauritius?

Failure to comply can lead to penalties such as fines, late payment interest, administrative sanctions, suspension or revocation of the business license, and potential legal actions, all of which can disrupt business operations and damage reputation.