Mauritius Nil Tax Offshore Companies

This week’s article discusses the features and benefits of the Mauritius nil tax International Business Company (known in Mauritius as a GBC2).

 

Mauritius is a group of lush tropical islands in the south western Indian Ocean and is located northeast of Madagascar and some 1,000 miles southwest of Seychelles. A former French and British colony, Mauritius offers:

 

  • A British system of law and parliament
  • Political/economic stability
  • A well-developed Financial Services Sector; and
  • A well-educated productive bi-lingual French/English speaking workforce.

 

Since gaining independence from Britain in 1968 the Mauritian economy has grown steadily from one based in agriculture to a more diversified economy with Tourism, Financial Services and Agriculture (primarily sugar cane) as its 3 economic pillars. This has seen a resulting rise in standard of living from low to middle income delivering levels of economic and political stability which are the envy of the region.

 

Whilst better known as a Banking Centre (Mauritius boasts at least 3 world standard “Offshore” Banks) Mauritius offers two forms of nil tax Offshore Company ie the GBC1 ( a domestic designed to do business or hold shares in companies based in DTA Treaty partner countries) and the GBC2.

 

The GBC2 is Mauritius’s equivalent of an IBC – a GBC2 pays no tax in Mauritius on what it earns internationally, and can only be used to do business outside of Mauritius.

 

Feature and Benefits of Mauritius GBC 2 Companies Include:

 

Legal Framework

The Mauritius GBC2 is set up under the Companies Act 2001 and licensed under the Financial Services Act 2007.

 

Special Characteristics

A Mauritius GBC2 is prohibited from having transactions with Mauritian residents or in Mauritian currency; and

 

A Mauritius GBC2 is not considered as a Mauritius tax resident company (and therefore does not have access to the double tax treaties of Mauritius).

 

Liability of Shareholders

The liability of the shareholders of a Mauritius GBC2 is limited up to the unpaid amount of the shares they hold.

 

Shareholders

The minimum number of shareholders of a Mauritius GBC2 is 1 and the maximum is 25.

The shareholders do not have to be residents of Mauritius.

The shareholders of a Mauritius GBC2 can be individuals and/or legal persons.

There is no public register of shareholders in Mauritius for GBC2’s.

Shareholder’s meetings can be held anywhere.

 

Directors & Secretaries

The minimum number of directors of a Mauritius GBC2 is 1.

There is no restriction on the nationality or residency of the directors.

Corporate directors are allowed.

Director’s meetings can be held anywhere.

There is no requirement for the directors to be shareholders.

The names of Directors do not appear on any public record.

There is no requirement to appoint a Company Secretary.

If a Company Secretary is appointed the Secretary does not have to be a Mauritius resident

 

Shareholders Meetings

Every company in Mauritius should hold an annual meeting of its shareholders.

The first annual shareholder meeting should be held not later than 18 months from incorporation.

Annual shareholder meetings should be held not later than 6 months after the balance sheet date of the company and not later than 15 months after the previous annual meeting.

Annual meetings can be held anywhere in the world.

 

Capital

The minimum capital requirement for a Mauritius GBC2 is US$1.

The share capital can be denominated in any currency, except MURs.

Non-par value shares are allowed.

Bearer shares are not allowed.

There is no capital duty on the issuance of shares of a Mauritius GBC2.

Authorised share capital can be any amount (commonly $US100,000)

 

Registered Agent/Office

A Mauritius GBC2 must have a registered office in Mauritius.

Every Mauritius GBC2 must have a Resident Agent in Mauritius.

 

Restrictions applicable to Foreign Investors

There are no restrictions on foreign investors investing in a Mauritius GBC2.

 

Formation Procedure

The following procedure needs to be followed in order to incorporate a GBC2 company in Mauritius:

 

  1. Reserve the name of the company with the Registrar of Companies.
  2. Apply for a Category 1 Global license through a licensed offshore management company.

 

It usually takes between 3 and 5 working days to register a Mauritius GBC2.

 

Registration Fees

The registration fee payable to the Financial Services Commission upon incorporation is US$65.

 

Government Fees

The annual return filing fee is US$65.

 

The minimum annual tax/license fee is $US235

 

Confidentiality

The details of the beneficial owner are disclosed to the service provider and to the Authorities but are not available on public record.

The details of shareholders are not available on public record.

The details of directors are not available on public record.

The accounts are not publicly accessible.

The use of nominee shareholders is permitted.

 

Filing Requirements

Registrar of Companies: A Mauritius GBC2 is required to file an annual return with a summary of its financial position within 6 months from the year end.

 

Tax Authorities: There is no requirement for a Mauritius GBC2 to file a tax return.

 

Accounting Records

A Mauritius GBC2 is required to maintain accounting records.

Accounts must be filed (though these are not publicly accessible)

Accounting records can be kept outside Mauritius

The Accounts can be in any currency.

 

Financial Statements

A Mauritius GBC2 should prepare annual financial statements under IFRS.

In accordance with IFRS, holding companies are required to prepare consolidated audited financial statements on an annual basis. However, consolidation is not required if the company is an intermediary holding company and a holding company further up the structure prepares consolidated financial statements under approved accounting standards.

 

Audit

A Mauritius GBC2 is not subject to audit requirements.

 

OCI MAURITIUS GBC2 COMPANY PACKAGES

 

At OCI we believe in giving you more for your money than would the average IBC formation service. Hence included in the incorporation package for your Mauritius GBC2 Company is the following:

 

Services:

  • Unlimited name availability inquiries
  • Advice from an experienced International Corporate Lawyer on how to structure your company
  • Preparation (overseen by a lawyer) of application to incorporate the company
  • Preparation (overseen by a lawyer) of the company’s memorandum of association
  • Preparation (overseen by a lawyer) of the company’s articles of association
  • Attending to filing incorporation request with the company registry
  • Attending to payment of government filing fees
  • One year’s Registered Agent service in the country of incorporation
  • One year’s Registered Office service in the country of incorporation
  • Mailing address in the country of incorporation
  • Delivery of Incorp pack by international courier (ie DHL/Fedex/TNT etc)
  • Unlimited free legal consultations for 12 months

 

Documents included in your Incorp pack:

 

  • Certificate of incorporation
  • 2 sealed/stamped copies of the company’s Memorandum of Association
  • 2 sealed/stamped copies of the company’s Articles of Association
  • Resolution appointing first director/s
  • Resolution appointing first shareholder/s
  • Up to 5 share certificates
  • Resolution to open a bank account
  • Resolution to rent an office
  • Resolution/s to engage a Phone, Internet & Website service provider
  • Resolution to hire a staff member/s
  • Resolution to appoint a company lawyer
  • Resolution to appoint a company accountant
  • Resolution appointing you as the company’s authorised representative in commercial negotiations
  • Resolution issuing a Power of Attorney in your favour
  • Agreement authorising you to represent the company in commercial negotiations
  • Power of attorney authorising you to sign documents on behalf of the company
  • Register of directors
  • Register of shareholders
  • Expression of wishes (ie an “Offshore” Will)
  • Lawyer authored User Guide (“How to Use Your Offshore Company”)

 

Price (all inclusive): $US 1,700

 

With tax effective offshore company management (ie including Professional Corporate “Nominee” Director, Shareholder & Company Secretary): $ 2,100

 

Every effort has been made to ensure that the details contained herein are correct and up-to-date, but this does not constitute legal or other professional advice. We do not accept any responsibility, legal or otherwise, for any error or omission.

 

 

 

BELIZE PRIVATE FOUNDATIONS

This week’s article introduces the Belize Private Foundation.

 

The INTERNATIONAL FOUNDATIONS ACT of 2010, introduced Belize as a leading player in the world of Private Interest Foundations.

 

Designed primarily for asset protection purposes the Belize foundation is a civil law alternative to the common law trust which is becoming increasingly popular among international investors. The essential difference between a trust and a foundation is that a trust is a relationship (not a legal entity) between the trustees and the bene­ficiaries created by an act whereby the settlor transferred property to the trustees for the bene­fit of the benefi­ciaries; whereas a foundation is a legal entity in its own right and, unlike trustees (who are answerable to benefi­ciaries), foundation council members are answerable to the foundation.

 

Of late, a number of offshore ­financial centers in common law jurisdictions have enacted legislation to provide for the establishment of foundations to remain on the cutting edge of this highly competitive industry. The Act is largely based on similar legislation in Antigua, the Bahamas and Anguilla, although consideration has also been given to corresponding legislation in Panama and Isle of Man.

 

The Act applies only to non-residents of Belize. It is con­ned to ‘international foundations’ and does not deal with domestic foundations.

 

Key Features of the Belize Private Interest Foundation:

 

  • The Act seeks to make the foundation more user friendly, in effect, a hybrid between an IBC and a trust. Provisions are inserted to facilitate and enhance efficient but discrete registration, renewal, striking off, restoration, dissolution, continuance and discontinuance of foundations, as is currently the case with the IBC’s and the IBC Registry
  • Like an international trust, registration is mandatory for international foundations, with the international foundation being invalid and unenforceable if not registered.
  • Registration does not require the foundation charter to be registered, only the particulars thereof, need to be furnished.
  • While the Act does grant full exchange control and tax exemptions to international foundations, the Act makes it expressly clear that such exemptions only apply to international foundations duly registered.
  • Specifi­c provisions are inserted for purposes of civil asset protection. Such provisions provide for non-recognition of foreign judgments and anti-alienation of the foundation endowment as well as the reduction of the limitation period within which to bring actions in relation to a foundation. There are similarities in these provisions and our trust legislation as well as trust legislation from other jurisdictions, although the asset protection features of the Belize international foundations are stronger.
  • Provision is also made for substantial security for costs in respect of claims brought against international foundations. This is an attractive feature of the Belize foundations as it seeks to discourage frivolous litigation being instituted in Belize.
  • Detailed provisions, clarifi­cations and limitations are also introduced in respect of the founder, the foundation endowment, the charitable foundation as well as other bodies and relevant matters involving the foundation. Such extensive codi­fication substantially eliminates legal guesswork in the interpretation of certain powers, rights and obligations.
  • Specifi­c provision is made for permissible disclosure of confi­dential information in pursuance of treaties having the force of law in Belize for mutual legal assistance in criminal matters, tax information exchange, money laundering and terrorism prevention, among other circumstances.
  • The fees as specifi­ed in the International Foundations Regulations are highly competitive as compared with other jurisdictions. The registration fee and the annual renewal fee is only US$200.00.
  • On the whole, the Act combines the best of both worlds. It replicates in a common law jurisdiction like Belize, the essential characteristics of a civil law foundation while avoiding unnecessary complications. It is hoped that a foundation established under Belize law will prove to be an ideal vehicle for asset protection purposes and will ­find favour with investors from both the common law and civil law countries.

 

Prices:

 

For a Belize Foundation, inc 1 year’s basic admin $,1600 ( + $400 if a Nominee Founder & $300 if a Nominee Councillor is required ( both of which would be advisable for tax purposes):

2nd and subsequent years $715 (or $1,015 if nominees are required)

 

For more information on Belize Private Interest Foundations please Contact me or click on any of these links:

What is a Foundation:http://offshoreincorporate.com/private-interest-foundations/

What is a Protector: http://offshoreincorporate.com/faq/what-is-a-protector/

What is a Council: http://offshoreincorporate.com/faq/what-is-a-council/

What is a Founder: http://offshoreincorporate.com/faq/what-is-a-founder/

What is a Charter: http://offshoreincorporate.com/faq/what-is-a-charter/

What are Foundation Regulations: http://offshoreincorporate.com/faq/what-are-foundation-regulations/

 

As ever local laws can have an impact. So be sure to seek local legal/tax/financial advice before committing to register a Belize Foundation

 

How to Do Currency Speculation Using an Offshore Company

Currency speculation (ie buying up large quantities of a particular currency in the expectation/hope of it being revalued in the near future) is an activity which lends itself well to “Offshore” Corporate Structuring. 

 

To summarize how it works is:

 

  • You set up a zero tax Offshore Company eg an International Business Company (“IBC”). The Company would be owned by a Private Foundation (ie to get around CFC laws and bank account reporting)
  • The IBC enters into a contract with you to buy the Currency (eg Dinars/Dong or etc) at their present value
  • The sale will need to be seen to be at fair market value (you can’t just sell the Dinars/Dong or etc to the IBC for one Dollar/Euro!). And the contract of sale will need to be seen to be on normal or reasonable commercial terms. That said the sale contract could be an instalment or vendor finance contract ie where a deposit is paid and ownership is transferred but the seller retains a mortgage until such time as all the instalments have been paid
  • Depending on where you live you may be able to “gift” the money to an Offshore entity. It might be difficult to explain why you’re gifting a sum of money to an IBC hence the smarter thing to do might be to set up (and transfer ownership of the property to) a PIF ie Private Interest Foundation (eg a Charitable Purpose Foundation). This one might survive the “sniff test”. Why? Because all day every day well intentioned wealthy persons gift money or assets to Charitable causes
  • Once the currency is revalued your IBC exchanges the speculative currency (eg Dinars/Dong etc) for hard currency (eg USD) and banks the profit free of tax
  • For all intents and purposes the IBCs trading profits are generated in a nil tax environment tax free/offshore (ie provided the IBC Is structured properly)
  • When you need some living/spending money the IBC pays you a wage, or consulting fees or a commission (eg a percentage of trading profits generated)
  • That living/spending money can be paid to your local bank account (which means it would be assessable income wherever you are tax resident though you should also be able to claim a sizeable amount of allowable deductions eg for home office, car, equipment, insurances, travel, stationary etc etc to reduce the amount of your “taxable” income at home)
  • If you don’t want the authorities to know how much money you are earning by way of wages you could use an anonymous ATM or Debit/VISA card to withdraw your wages from an Automatic Teller Machine
  • The majority of trading profits could be reinvested Offshore potentially tax free.

 

As always local laws can have an impact. So be sure to seek local legal/tax/financial advice before committing to set up such a structure/business.

 

OFFSHORE COMPANIES & FOUNDATIONS – MONEY FLOWS

For clients looking to (a) avoid Controlled Foreign Corporation Laws and (b) get around the reach of AEOI (Automatic Exchange of Information) protocols the Seychelles Foundation has become a must have as an ingredient of any successful International Corporate structuring plan.

 

In such a situation a Seychelles Private Foundation is set up to hold the shares of a tax free Offshore Company: The Company does the trading, ie it buys and sells, employs staff etc; The Foundation is completely passive ie it just holds the shares of the Company.

 

Clients looking to set up such a structure invariably ask me “So how does the money flow?”

 

Generally speaking the monies usually flow in through the company and no dividend is paid by the Company to the Foundation unless:

 

(a) You’re in a risky business and want to get money out of the company and into somewhere where it is safe from law suits etc; or

 

(b) You’re ready to retire, you move to (and become a tax resident of) a tax haven at which time the Company pays  a dividend to the Foundation and the Foundation pays distributions to you which you receive free of tax; or

 

(c) The Company has made a stack of $ and you want to go and buy an investment or do some (eg forex) trading (in which case the really clever thing to do would be to pay dividends to the Foundation and have the Foundation incorporate a 2nd company to go buy the investment or do the trading, but more on that another time…).

 

Bear in mind domestic laws can have an impact. Hence it would be wise to seek local legal/tax/financial advice before committing to create such a structure.