Company- Management | Offshore Companies International

What is the Difference Between a Trust & a Foundation?

Often we are asked What is the difference between a Trust and a Foundation?

A Private Foundation is very similar to a Trust in that it’s a 3 headed creature… a Foundation:

A Foundation Is set up by a person called a Founder (a Trust is set up by/under the authority of a “Settlor”)
A Foundation is managed day to day by a person called a Councillor or a Board/team of Councillors (a Trust is managed day to day by a Trustee or a board of Trustees)
A Foundation typically has beneficiaries ie persons who are designed ultimately to benefit financially from the set-up of the Foundation (same as with a Trust, ie a Trust typically has beneficiaries ie persons who are designed ultimately to benefit financially from the set-up of the Trust)

BUT…

A Trust is not a legal entity it’s more like a contract ie an (asset management) arrangement between the Settlor (ie the person who authorised the set-up of the Trust) and the Trustee.

When a Trust owns/holds an asset the Trustee is considered the legal owner of the Asset.

BUT… (generally speaking) the beneficiaries of a Trust are considered at law to be the beneficial owners of the Trust assets ie they have what Lawyers call a “beneficial interest” in Trust assets ie a legally recognizable interest. Additionally in certain instances the beneficiaries of a Trust are entitled to receive a distribution from the Trustee.

Given the above some countries have introduced deemed distribution laws ie if you’re entitled to receive a distribution from an Offshore Trust – even if you’ve received nothing from the Trust – you are expected to declare/pay tax on your share of the Trust’s profits (ie you are, in effect, deemed to have already received a distribution from the Trust!)

A Foundation, unlike a Trust, is a separate legal entity. When a Foundation owns an asset the Foundation itself is presumed at Common Law to be both the legal owner AND the beneficial owner of any asset the Foundation holds. Moreover, the beneficiaries of the Foundation (a) hold no legal or beneficial interest in any asset held by the Foundation and (b) are not entitled to receive a distribution from the Foundation unless/until such time as the Foundation council actually resolves to pay them a distribution.

One jurisdiction (ie Seychelles) has taken that one step further ie they have actually codified that common law provision into statute. Section 71 of the Seychelles Foundations Act provides that the legal AND beneficial owner of the asset held by the Foundation IS THE FOUNDATION ITSELF.

(you can download a copy of the Legislation via this Link: https://fsaseychelles.sc/component/edocman/legislations/fiduciary/ifsp2 )

Why a Foundation is Superior to a Trust

Are you looking to set up an Offshore Trust?

If your reason for wanting to set up an Offshore Trust is to try and defer paying tax at home on the earnings of the Trust or any Company it may own (or to build a bullet proof fence around any assets to be held by the Trust) you might want to consider setting up a Foundation instead…

The disadvantage of a Trust is typically Offshore Trusts are caught by local Controlled Foreign Trust and/or etc laws. Put simply if you have the means to remote control an Offshore Trust or if you are a presently entitled beneficiary of an Offshore Trust usually you’re required to declare locally and pay tax on the Trust’s earnings.

A Foundation is very similar to a Trust in that it’s set up by a Founder (like a Settlor in the case of a Trust) and managed day to day by a Councillor (like a Trustee in the case of a Trust) who manages the Foundation property for the benefit of the beneficiaries of the Foundation.

Moreover, a Foundation may get you around such issues as it’s a separate legal entity in its own right (ie the Foundation actually owns the assets held by the Foundation – unlike a Trustee who holds property for someone else ie the beneficiaries) and by law the beneficiaries are not entitled to the income or capital of the Foundation until it’s actually received. What this means is you potentially may be able to defer having to declare the income earned by any investments held by the Foundation enabling you, in effect, to reinvest 100% of that income not just the after tax component.

This would enable you to access the power of compounding on those investment earnings meaning your net worth will grow MUCH faster than what it would were you to declare/pay tax each year on your non local investment income. For an explanation of what the Power of Compounding is check this link:

https://www.iciciprulife.com/insurance-guide/financial-planning-tools-calculators/power-compounding-calculator.html#:~:text=The%20power%20of%20compounding%20works,accelerate%20the%20profit%20earning%20process.

Would you like to know more? Then please Contact Us:

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

DISCLAIMER: OCI is a Company/Trust/LLC/LP/Foundation Formation Agency. We are not tax advisers or legal advisers. You are advised to seek local legal/tax/financial advice in regards to your local reporting/tax requirements before committing to set up or use an Offshore Company or other entity.

MAURITIUS BROKER LICENSES

The reputation of Mauritius as an International Financial Centre rests on the quality of its services and its pool of highly qualified professionals.

Its modern and flexible legislation, affordable cost and low tax rate has made Mauritius one of the most attractive jurisdictions in the world.

The quality of its services and availability of a pool of highly qualified professionals has also contributed to enhance its reputation

The Securities Act 2005 and rules & regulations made under it allow for Investment Dealer Companies to be set up and licensed in Mauritius. These are particularly beneficial for Brokerage Houses operating worldwide.

WEALTH MANAGEMENT

A Wealth Management Company is an entity licensed as an Investment Adviser in Mauritius.

A Global Business Licence (GBL) may apply for an Investment Adviser Licence to perform the following:

There are two categories of licences, Investment Adviser (Restricted) which allows the provision of investment advisory services only through printed matter or other means, or Investment Adviser (Unrestricted) which authorizes a company to manage, under a mandate, portfolios of securities and give advice on securities transactions through printed materials or any other means. A licensed Investment Adviser may solicit any person to enter into securities transactions.

Licencing Conditions

In order to obtain an unrestricted licence, an investment adviser shall provide sufficient justification to the Mauritius Financial Services Commission (FSC) as to the competence of the persons who will be responsible for investment advice and the management of portfolios. An investment adviser, as the case may be, shall at all times employ or be represented by at least one representative who is entitled to carry out the functions of the investment adviser. The representative should hold a Degree in a relevant field and at least 4 years of relevant experience in investment business.

An investment advisor who is dealing outside Mauritius is not forced to appoint a representative.

Capital Requirements

The applicant for a licence shall maintain a minimum stated unimpaired capital of MUR 600,000 (approx. USD 20,000) or equivalent for an Investment Adviser (unrestricted) and MUR 500,000 (approx. USD 16,700) or equivalent for an Investment Adviser (restricted) licence. The minimum stated unimpaired capital shall be fully paid and no amount shall be due or payable. The licensee shall inform the FSC immediately where its minimum stated unimpaired capital falls below the minimum required.

SECURITIES OR CAPITAL MARKET INTERMEDIARIES LICENSES

Mauritius offers the opportunity to trade in a variety of commodities through the appropriate platform

LICENCE	DESCRIPTION/ACTIVITIES
Investment Dealer (Full service) Can be with or without underwriting	Act as an intermediary in the execution of securities transactions for clients; Trade in securities as principal with the intention of reselling these securities to the public; Underwrite or distribute securities on behalf of an issuer or a holder of securities; Give investment advice which is ancillary to the normal course of his business activities; and Manage portfolios of clients


Investment Dealer (Broker)	Execute orders for clients; Manage portfolios of clients; and Give advice on securities transactions to clients
Investment Dealer (Discount Broker)	Execute orders for clients without giving advice
Investment Dealer (Commodity Derivatives Segment)	Act as broker in Commodity Derivatives only
Investment Dealer (Currency Derivatives Segment)	Act as broker in Currency Derivatives only

Investment Dealer

The Investment Dealer licenses as issued by the Financial Services Commission in Mauritius are getting increasing popularity among many of the Brokerage Houses worldwide.

Application for Investment Dealer license must be made under a Global Business Licence Company is granted subject to the approval of the Financial Services Commission.

The Securities Act 2005 coupled with the Securities (licensing) Rules 2007 remain the main legal framework governing the provisions and setting the parameters within which a GBC 1 with an Investment Dealer license can operate.

There are different categories of Investment Dealer license and Securities (licensing) Rules 2007 clearly set out the activities authorized to be carried out under each category.

Categories of Investment Dealer:

Any person who, by way of business, intends to carry out any of the activities of investment dealer under section 29 of the Securities Act 2005 shall apply for a license as an investment dealer in one of the following categories:

a) Full Service Dealer authorized to:

Act as intermediary in the execution of securities transactions for clients;
Trade in securities as principal with the intention of reselling these securities to the public;
Underwrite or distribute securities on behalf of an issuer or a holder of securities;
Manage portfolios of clients.

b) Broker authorized to: execute orders for clients, to manage portfolios of clients and to give advice on securities transactions to clients;

c) Discount broker authorized to: execute orders for clients without giving advice;

An investor may apply for the following licences:

Investment Dealer (Commodity Segment) Licence which allows trading in Commodity Futures and Options. Products that can be traded with this licence are Gold, Silver and WTI (Crude Oil).
Investment Dealer (Currency Segment) Licence allows trading in a variety of Currency Derivatives. The following currency futures may be traded with this licence; EUR/USD, GBP/USD, JPY/USD, MUR/USD, ZAR/USD. Currency Futures for USD/MUR weekly delivery based contract which offers a convenient trading size of USD 1,000.
Investment Dealer (Equity Segment) Licence. The license allows trading in Contract for Difference (“CFDs”) CFDs enables retail participants to trade on Gold, Silver, WTI (Crude Oil), Pound and Euro with a smaller capital requirement compared to Futures Contract.

Capital Requirements for Investment Dealer

The applicant for an Investment Dealer licence shall maintain a minimum stated unimpaired capital as per Fourth Schedule of the Securities Licensing Rules 2007.

CATEGORY	MUR (approx. USD)
Investment Dealer (Full Service Dealer – including underwriting)	10,000,000 (335,000)
Investment Dealer (Full Service Dealer – excluding underwriting)	1,000,000 (33,500)
Investment Dealer (Broker)	700,000 (23,400)
Investment Dealer (Discount Broker)	600,000 (20,000)
Investment Dealer (Currency Derivatives Segment)	1,000,000 (33,500)
Investment Dealer (Government of Mauritius Securities and Bank of Mauritius Securities Segment)		200,000,000 (6,670,000)

The minimum stated unimpaired capital shall be fully paid and no amount shall be due or payable. The licensee shall inform the FSC immediately where its minimum stated unimpaired capital falls below the minimum required.

Licensing Conditions for investment dealer

The Commission shall not grant a full service investment dealer licence, unless it is satisfied that the applicant has established procedures designed to prevent conflicts of interest and the use of inside information by an effective segregation of its different activities.

The procedures shall ensure that the investment decisions concerning the portfolio of clients shall not be communicated or be available to any unauthorized third party.

Notes:

Difference between the full service (incl. underwriting) and full service (excl. underwriting) dealer

Full Service Dealer – Including Underwriting

This type of company is licensed by the FSC and is engaged in the business of trading in securities. It is authorised to:

Act as an intermediary in the execution of securities transactions for clients;
Trade in securities as principal with the intention of reselling these securities to the public;
Underwrite or distribute securities on behalf of an issuer or a holder of securities[This is the difference between licence excluding underwriting];
Give investment advice which is ancillary to the normal course of its business activities; and
Manage portfolios of clients.
Capital requirement: The minimum stated fully paid capital of a company holding a Full Service Dealer (Including Underwriting) licence is MUR 10,000,000 (approx.USD 335,000).

Full Service Dealer – Excluding Underwriting

This type of company is licensed by the FSC and is engaged in the business of trading in securities. It is authorised to:

Act as an intermediary in the execution of securities transactions for clients;
Distribute securities on behalf of an issuer or a holder of securities;
Give investment advice which is ancillary to the normal course of its business activities; and
Manage portfolios of clients.
Capital requirement: The minimum stated fully paid capital of a company holding a Full Service Dealer (Excluding Underwriting) licence is MUR 1,000,000 (approx. USD 33,500).

Investment Dealer Broker License under the Security Act

Financial services and securities included:

(a) Keeping, investing and managing money, securities and investment portfolios on behalf of third parties;

(b) shares or stocks in the share capital of a company, whether incorporated in Mauritius or elsewhere, other than a collective investment scheme;

(d) rights warrants, options or interests in respect of securities mentioned in paragraphs (a) and (b);

(e) treasury bills, loan stock, bonds and other instruments creating or acknowledging indebtedness and issued by or on behalf of or guaranteed by the Government of the Republic of Mauritius or the government of another country, a local authority or public authority, as may be prescribed;

(f) shares in, securities of, or rights to participate in, a collective investment scheme;

(g) depository receipts or similar instruments;

(h) options, futures, forwards and other derivatives whether on securities or commodities;

(i) any other transferable securities, interests or assets as may be approved by the Commission; or

(j) any such other instruments as may be prescribed.

Remark: The Investment Dealer is allowed to take money from the client by asking him to open an account with the Dealer. However, this money should be exclusively used for securities transactions.

Benefits of A GBL Company :

A GBL benefits from a deemed tax credit so that it will end up paying a maximum effective tax rate of 3% on its tradable profits;
There is no capital gains tax and no withholding tax on dividends, interest and royalties paid by a GBL company;
Access to the tax treaty network signed by Mauritius;
There is no minimum capital requirement for a GBL and the stated capital can be denominated in any currency except Mauritian Rupee;
A GBL is allowed to have either par value (which may be stated in more than one currency) or no par value shares. The shares can be in the form of registered shares, preference shares, redeemable shares and shares with or without voting rights. Bearer shares are not permissible;
Both individual and corporate bodies are allowed to be shareholders of a GBL;
There is no statutory requirement for a GBL to have a constitution. In the absence of the latter, the company will be governed by the provisions under the Companies Act 2001. The shareholders of the GBL may adopt a constitution at any time through a special resolution; and
It is to be noted that it is possible to apply for occupational permit for expatriates who are employees of the GBL Company.

Main Characteristics of a GBL:

A GBL must have a minimum of two (2) Resident Directors in order to avail of treaty benefits, with board meetings held in Mauritius. It is to be noted that the concept of Corporate Director is not applicable in case of a GBL ;
A GBL must at all times have a Resident Secretary and a Registered Office in Mauritius
A GBL must have a local auditor and a local bank account;
A GBL must file an annual tax return with the Mauritius Revenue Authority (MRA);
It must also file its audited financials prepared in accordance with internationally acceptable accounting standards, not later than 6 months after its financial year end;
The shareholders of a GBL must hold an Annual Meeting in every calendar year and within 6 months of the company’s balance sheet date;
the names of shareholders and beneficial owners coupled with their corresponding due diligence documents must be disclosed to the FS (such information, in addition to any filing and return of the GBL with the Registrar of Companies, are not available for public inspection)
Accounting records and statutory records such as register of members, register of directors, minutes of all directors’ and shareholders’ meetings and resolutions, amongst others, must be kept at all times at the registered office of the GBL.

Would you like to know more? Then please Contact Us:

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

DAO Structures: The Caymans Foundation Company Option

There has been much discussion across the past few years about the legal status of a DAO.

For those new to the concept a DAO (a decentralized autonomous organization) is a Blockchain based “organization” encoded as a transparent computer program, controlled by the organization members rather than by any outside entity or authority.

As discussed in a previous article the primary aim behind the creation of a DAO is to create a virtual entity to replace the central management of previous forms of organization. A decentralized autonomous organization (DAO), is an organization, particularized by rules encoded as a computer program, that is transparent, and controlled by the organization members. In terms of decision making a DAO is, in effect, unable to be influenced by any outside party including any central government.

Legal challenges can come into play if a DAO wants to own Intellectual Property eg a Patent (Can a DAO in fact own a patent? It’s a moot point currently being debated by final year IP law students in high level law schools!). There’s also the inherent litigation risk associated with any unincorporated Association. If a DAO were to be sued – without the protection of having been incorporated as a Limited Liability body – the individual members of the DAO would be jointly and severally liable for any judgment debt that may be entered.

Enter the progressive Financial Centre that is the Caymans Islands which passed amendments to its Companies Law in 2017 to give birth to a product now at the forefont of DAO Industry developments ie the “Foundation Company”.

Over the course of the past few years we have seen numerous DAOs congregate as Private Foundations. The jury is still out however in terms of whether a Foundation can deliver the necessary commercial flexibility that a DAO may need to take a product (or service) to market. Typically a Foundation with commercial objectives would form a subsidiary Company - which would enter into some form of Licensing or Royalty agreement with the parent Foundation – such as would enable the Company to commercialise any IP owned or developed by the Foundation.

A Foundation Company potentially can cover both objectives within one legal shell.

Cayman Islands Foundation Companies – Overview

The Caymans Islands Foundation Company is a remarkably flexible vehicle that operates like an incorporated trust, allowing it to function like a civil-law foundation or common-law trust while retaining the separate legal personality and limited liability of a company.

The passing of this new Law was timely as it coincided with the nascent emergence of the DAO in the Blockchain space. As DAOs are launched with the ultimate goal of becoming fully decentralised and governed by the DAO’s community, a Foundation Company vehicle can assist the Founders of DAOs to achieve a range of goals.

The Need for Legal Personality

DAO Founders are often reluctant to create a legal personality for the DAO. As the purpose of a DAO is to be a decentralised organisation that is governed by a community, the idea of centralising responsibilities or ownership rights into a legal person is often seen as anathema to the core values of the project.

Moreover, the legal structures available in many jurisdictions require some person or group to act as the owner of the DAO. However, DAOs without legal personality run into problems. These include the inability of the DAO to:

(a) interact with third parties outside the DAO

(b) enter into contracts (particularly with digital asset exchanges)

(d) protect valuable intellectual property that may be imitated by other projects or DAOs, and

(e) carry out the wishes of the DAO where the community has voted for the DAO to undertake an action vis a vis third parties.

As a result, DAO Founders can sometimes find themselves carrying out actions on behalf of the DAO and, consequently, be personally exposed to potential liability.

Foundation Company as a Solution

The solution to the problems above is for the DAO to establish a Foundation Company. Like a typical company, the Foundation Company has legal personality to enter into contracts and undertake actions with third parties. It is also managed by directors who carry on the business of the DAO. However, unlike a company, a Foundation Company can be structured without shareholders. In essence, it can be ownerless – just like the DAO it represents.

In place of shareholders, a Foundation Company can be supervised by a supervisor (or even multiple supervisors if desired). A supervisor has no ownership or economic entitlement in the Foundation Company but simply acts as a steward, ensuring that the directors of the Foundation Company observe their obligations to the DAO pursuant to the Foundation Company’s governing documents. Therefore, with no shareholders, all of the officers of a Foundation Company simply have the objectives of the DAO as their priority – similar to trustees and enforcers carrying out the objectives of a trust.

Flexibility

As a further benefit, the Caymans Law provides the utmost flexibility to a Foundation Company when drafting the governing documents of a DAO. These governing documents comprise of the memorandum and articles of association (the M&A). With some limitations and restrictions, the M&A of a Foundation Company could include almost any form of governance structure so long as the Foundation Company is managed by at least one director, is supervised by at least one supervisor and has a secretary.

The director(s) and the supervisor(s) need not be natural persons (e.g. they could be corporate vehicles) and could even be the same person. The M&A could even mirror the governance structure of the DAO itself, with each user or node of the DAO entitled to one vote on any number and type of matters included as such in the M&A.

At the very least, the M&A could include provisions that require the director(s) and the supervisor(s) of a DAO to carry out the decisions of the DAO or could provide that the director(s) and/or the supervisor(s) be nominated by majority resolution passed by the DAO. The possibilities are truly endless and the foundation company’s flexibility is a great advantage to any existing or future DAO.

Works like a Trust

DAOs often wish to hold assets for the benefit of the DAO community or issue tokens or distribute rewards to users. Once again, the Foundation Company is a great fit as it acts like a legal trust and has the power to designate beneficiaries. However, one particular benefit of the Law’s concept of a beneficiary is that it will not be treated as a beneficiary under a legal or common law trust arrangement. This is because the starting position under the Law is that a designated beneficiary has no rights or powers as against the foundation company.

The Law therefore excludes the creation of any inadvertent common law trust rights and limits the beneficiary’s rights to those expressly stated by the Foundation Company. This is particularly useful for DAOs which are then free to designate the users or the nodes of a DAO as beneficiaries but with limited rights.

Another attractive feature is that a Caymans Foundation Company does not have to maintain a register of its beneficiaries. This means that a Caymans Foundation Company need not specify individuals as beneficiaries but can designate beneficiaries by class of persons (e.g. “tokenholders” or “node operators”) and also reward those beneficiaries according to that class. Whilst anti-money laundering considerations are always a factor, this could be particularly useful for DAOs built on blockchain technology where the DAO intends to undertake distributions, airdrops of tokens or other rewards to the DAO community.

Tax and Economic Substance

As a DAO is decentralised and in theory has no fixed location, many DAO Founders are reluctant to incorporate their DAO in any particular jurisdiction as this may lead to unintended and unwanted tax consequences. However, as a tax neutral jurisdiction, a Caymans domiciled Foundation Company need not worry about taxes being levied against it in the Cayman Islands.

Interestingly, a Foundation Company limited by guarantee is specifically exempted from the economic substance regime of the Cayman Islands. Hence a DAO incorporated as a Caymans Foundation Company does not have to move staff, nodes or resources to the Cayman Islands to prove that it has substance here. This means that the DAO can be a truly internationally focused project. It also means that it can hold the intellectual property of the DAO and even make profit from the intellectual property (or any other relevant activity under the substance regime) without creating substance in any particular jurisdiction.

Would you like to know more? Then please Contact Us:

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

DISCLAIMER: Information current at 31.10.22. OCI is a Company/Trust/LLC/LP/Foundation Formation Agency. We are not tax advisers or legal advisers. You are advised to seek local legal/tax/financial advice in regards to your local reporting/tax requirements before committing to set up or use an Offshore Company or other entity.

How to make an Investment in the name of your IBC

We are often asked by clients How do I buy or make or place an investment using my Offshore Company?

(This article assumes that you’ve already set up an Offshore Company and that you’ve deployed a Nominee Director as part of your Corporate/legal structure).

The starting point here is that you would or should have been appointed, via a consultancy agreement/contract, as an authorised representative/agent of the Company.

Such an appointment, in effect, gives you (or should give you) the authority and the power to go shopping for investments on behalf of your IBC/Offshore Company.

Typically you would also have the power to negotiate the price of the investment and the terms of the purchase.

Once (ie acting as Agent for the company) you’ve reached agreement with the seller/investment provider as regards the price and terms of the investment:

You would make certain recommendations in writing to the Company Director ie to place XYZ investment. In short you’d need to explain what the particular investment/opportunity is that you’ve found and why you think/believe the particular investment/opportunity you’ve found is or would be a good investment for the company. Ideally, at the same time you would email the documents that need to be signed by the Company in order to proceed with the investment to your International Corporate Services Provider/the Company Director; and
Your Company would then call a Board meeting authorizing the Company to proceed with the transaction
The Company director would then sign the board resolution and the purchase documents.

NOTE: If you need to close the sale quickly the Board could provide you or your local Lawyer with a Limited/Specific Power of Attorney enabling you/your Lawyer to sign the Purchase/Sale Contract

Would you like to know more? Then please Contact Us:

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

Costa Rican EGaming Licenses

Are you looking to set up an Online Gaming Business or a Payment Processing Business? If so you might want to consider applying for a Data Processing License in Costa Rica (“CR”).

Costa Rica Background

Costa Rica is a small (population 5 million) Central American country (bordered by Panama, Nicaragua, the Pacific Ocean and the Caribbean Sea) and is arguably the most politically and economically stable country in the region.

Historically the Costa Rican economy centred around agriculture but, since the dawn of the new millennium, CR has diversified its economic focus, in the process creating a boom in tourism, finance, and corporate services. Costa Rican residents now enjoy a high standard of living, social stability and some of the foremost education in Central America. Spanish is the first language but English is commonly spoken particularly in business circles.

In summary what you/we will need to do here is incorporate a Costa Rican Company (ie an S.R.L.) AND then apply for a Data Processing License (“DPL”).

For many years Costa Rican Corporations have been known and used in the offshore world as vehicles for online gaming. Hence included in the Articles of Incorporation of such companies appears typically the activity of ”online gaming and entertainment”. Some clients can function just with the CR company, however most clients come to us and request the DPL as Banks, Merchant Account Providers and Ewallet providers require to sight such a licence before they will agree to provide accounts or payment processing or merchant account services for CR Companies.

Step 1 Company Formation

First step is you will need to Incorporate a Costa Rica (“CR”) Company for Gaming:

Type of entity: S.R.L. (Sociedad de Responsabilidad Limitada)

Main characteristics: authorized for gaming in its bylaws, limited liability, offshore tax exempt, low maintenance, operated by a single director

Includes:

ü Articles of Incorporation

ü Share Certificates

ü Legal Books

ü Corporate Certification

ü Resident Agent*

ü Registered Address*

ü Official Translation to English

ü Tax Registration

*Included in the first year*

Legal Fees: USD 2,300 (includes registry fees, VAT and Yearly Corporations Tax)

Estimated Duration: 2-4 days (we offer the fastest incorporation service available compared to the normal 2-4 weeks of other companies)

After one year of operation, you will need to renew it by paying:

ü Legal Fees, Renewal of Resident Agent, Registered Address, Legal Book Custody, Yearly Corporations Tax Payment Diligence and Final Beneficiary Declaration: USD 950.00

ü Associated Expenses, Yearly Corporations Tax USD 150.00 paid with the incorporation and then every January.

Annual Renewal:

Re Gaming Businesses as advised there is no online gambling license in Costa Rica and that a company incorporated under the laws of Costa Rica can operate an online gaming business under a “data processing” license. The basic requirements to obtain such a license are:

Office Lease Contract
Health permit
Workers insurance policy

A specific gaming license was issued as a tax in 2012, such license starts at US$40K per year and increases to US$60K and US$80K depending on the number of employees, This particular license was created for gaming companies that actually have employees in Costa Rica; thus far nobody has paid for such a license as it doesn’t provide any real benefit. Hence startups keep operating with just the CR Corporations and with the Data Processing License (DPL – see details below) which is especially valuable if you wish to be accepted by ewallet providers such as Skrill etc.

The following is the description that we give to our clients on a daily basis:

Step 2: Apply for a Data Processing License

Type of license: CR Business License

Process Includes:

ü Lease of Small Office Space at a selected local government

ü Zoning Permit at local government

ü Employer Registration at Social Security Agency

ü Work Risk Insurance at Insurance Agency

ü Health Permit at Ministry of Health

ü Business License at local government

Legal Fees: USD 9,750 (50% to begin, 50% with approval)

Estimated Duration: 3 months

After one year of operation, you will need to renew it by paying:

ü Yearly Renewal: USD 4,750 (after one year of operation includes one year lease and business license yearly taxes and processing fees)

Ancillary Services

We can also assist with drafting and/or reviewing the website and service terms and conditions. For these kind of jobs we charge an hourly rate ($US300 per hour). Average cost is usually between $1,500 and $US2,000. And we can advise on what countries residents it would be illegal to market such a business to (again on an hourly rate basis)

Would you like to know more? Then please Contact Us:

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

Seychelles – Passive Foundations Account Keeping Requirements – Reviewed

Seychelles has recently introduced new Account keeping requirements as regards Seychelles IBCs and Seychelles Private Foundations.

There has been some consternation about how the rules work, particularly in respect of Foundations which are completely passive (the typical Seychelles Foundation is set up to own the shares of a Trading or Investment Company which generates all the revenue) or which own Companies that are yet to trade.

This article is designed to provide some clarity in regards to such issues.

FOUNDATIONS

Firstly, if a foundation was only formed in January 2022 and has not operated and does not yet have any assets or liabilities or income, then obviously no “accounting records” will exist. In such a case, the FSA’s Foundation Guide (which can be downloaded from here: https://fsaseychelles.sc/legal-framework/guidelines – see paragraph 19.11 and Annexure 2) permits the Foundation to provide a declaration for accounting record purposes confirming that it has no activities/assets, etc. See below a sample of such a declaration.

Every foundation must provide an Annual Financial Summary (short-form accounts) – see Annexure 3 to the FSA’s Foundation Guide. However, the good news is that if a foundation was formed in January 2022, then it has until end June 2023 to provide its first Annual Financial Summary. This is clear from paragraph 19.14 of the Guide, which mirrors section 75(3)(a) of the Foundations Act: a foundation shall prepare an annual financial summary to be kept at its registered office in Seychelles within 6 months from the end of the foundation’s financial year. The default financial year is the calendar year, unless changed by resolution of councillors and notified to the RA (section 75(3C) of the Foundations Act).

The above relates to a foundation without assets/liabilities, which has not commenced operating or is dormant.

What about if you’re the typical case ie you’ve set up a foundation purely to hold shares in an active trading company? In this instance the corporate documents of the subsidiary company owned by the foundation would constitute accounting records and copies would need to be submitted to the Foundation’s Seychelles Registered Agent. Yes a “blank” Annual Financial Summary could be provided. However, the Annual Financial Summary should not be totally blank if the foundation owns shares, as these are an asset of the foundation, i.e. should appear on the balance sheet/Annual Financial Summary as an asset, at least at book value (the amount paid for the shares).

If the foundation has entered any financial-related agreements (such as a share subscription agreement or loan agreement, etc), these too will be “accounting records”.

Paragraph 19 of the FSA’s Foundation Guide provides comprehensive guidance regarding accounting record requirements for foundations.

IBCs

For an IBC, only a “large company” is required to prepare an Annual Financial Summary. “Large company” means a company which meets the annual turnover (income) threshold specified for a “large business” under the Revenue Administration Act, namely Seychelles Rupees 50,000,000 (approx. US$3.7 million as at today’s date ie 25.9.2022).

As with foundations, if an IBC has no assets/liabilities and has not yet traded or is dormant, for accounting record purposes it may provide a declaration: see paragraph 32.10 and Annexure 24 of the FSA IBC Guide (which can also be downloaded from/via this link: https://fsaseychelles.sc/legal-framework/guidelines ) .

Paragraph 32 of the FSA’s IBC Guide provides comprehensive guidance regarding account record requirements for IBCs.

ACCOUNTING RECORD DECLARATION

Section 75 of the Foundations Act 2009

TO: The Foundation’s Registered Agent in Seychelles

[ insert name & address of Registered Agent ]

[ insert date ]

Dear Sir

[ Insert Foundation name ] Foundation No: [ xxxx ] (the “Foundation”)

We, the Councillor(s) of the Foundation, hereby declare and confirm that (tick as appropriate):

Since its incorporation/registration in Seychelles, the Foundation has no activities and has no assets or liabilities.

For the relevant period the Foundation has not traded and has not carried out any transactions.

Therefore, the Foundation has no transaction for which it needs to lodge the relevant accounting records in Seychelles, for the period from [ insert relevant period, i.e. either from January to June or from July to December, as applicable ], [ insert year ].

Yours faithfully

Signature: _______________________________

Name of Councillor / Authorised Signatory: _______________________________

For and on behalf of the Foundation

Note:

The Act requires a Foundation to keep reliable accounting records:

(a) that are sufficient to show and explain the Foundation’s transactions;

(b) that enable the financial position of the Foundation to be determined with reasonable accuracy at any time; and

(c) that allow for financial statements of the Foundation to be prepared.

The accounting records should be kept at the registered office in Seychelles on a bi-annual basis, as follows:

(a) Accounting records relating to transactions or operations in the first half (January to June) of a calendar year must be kept in Seychelles by July of that year

(b) Accounting records relating to transactions or operations in the second half (July to December) of a calendar year must be kept in Seychelles by January of the following year

Would you like to know more? Then please Contact Us:

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Mauritius Special Purpose Funds – Setup Costs

Depending on your requirements, setting up a Mauritius Special Purpose Fund can either be done through an open-ended fund (CIS) or a closed ended fund (CEF), the main difference being the frequency at which the fund plans to redeem the investments.

On an indicative basis, we have displayed below OCI’s fee schedule for the setting up of an SPF through a CIS and our fact sheet on CIS and CEF.

Services that OCI Can supply or arrange (and costs thereof) in relation to a Special Purpose Fund in Mauritius are detailed below.

Services to the Fund	Services to the CIS Manager
KYC Review and Set-up of a GBC structured as a Special Purpose Fund.	Establishment of the CIS Manager
Registered Office Address	Registered Office Address
Company Secretarial Services	Company Secretarial Services
Directorship services	Directorship services
Preparation of Annual Financial Statements	Preparation of Annual Financial Statements
Monthly NAV calculation	Provision of Money Laundering Reporting Officer
Provision of Money Laundering Reporting Officer	Provision of Compliance Officer
Provision of Compliance Officer	Tax and Statutory Filings
Tax and Statutory Filings	FATCA/CRS
FATCA/CRS

Introduction

This letter specifies the services we are to deliver as your service provider for the subject of this engagement, the team we have assigned to the Engagement, how you will remunerate us and other terms of business governing our relationship.

We kindly request you to read this letter carefully and confirm your agreement with its terms by signing and returning to us the enclosed duplicate.

1. Mauritius GBC structured as a Special Purpose Fund

A. Set-Up Fee:

Particulars		USD
Professional Fees (one-off fee) Review of due diligence documents, preliminary review and application for name reservation; Preparation and submission of all necessary paperworks to register the Company and application of Licences, provision of Constitution & Legal Certificates, receipt of Certificate of Incorporation and Licences, first Board Minutes, issue of first Share Certificates, FATCA and CRS classification.	15,000
Opening of first bank account in Mauritius	2,700
Government Fees:
ROC Processing Fee	350
Annual Fee payable to FSC- GBC Licence	1,950
Annual Fee payable to FSC – Fund licence	3,000
FSC Processing Fee – GBC Licence	500
MRA fee for the First time application of Tax Residency Certificate (“TRC”)	500
Total :	20,300
Legal Fees
The above excludes Legal Fees if required (in the range USD 10,000-15,000)

B. Annual Administration Fees

Particulars	USD Annual
Provision for a Registered Office & Registered Agent	1,300
Provision for Company Secretary	1,300
Annual Responsibility fee for 2 Resident Directors	7,000
Provision for Money Laundering Reporting officer (MLRO)	3,000
Provision of a Compliance Officer	3,000
Review and Compliance Fees	700
Administrative Services (ensuring that the Fund complies with the licence conditions and Mauritius laws, Preparation of minutes of meetings, convening Board meetings, maintaining registers, etc)	4,000
Government Fees
Preparation of Tax Return	1,350
Tax Residence Certificate payable to MRA	750
Annual Fee payable to the FSC – GBC	1,950
Annual Fee payable to the FSC – Fund Licence	3,000
Annual Fee payable to ROC	275
Accounting and Other Fees
Retainer for preparation of annual accounts under IFRSMaintaining Accounting Records and Liaising with Auditors Calculation and Sign-off of NAV	10,000
Professional fees for due diligence on investors	USD 100 per investor

2. Mauritius GBC – CIS Manager

Incorporation Fee:

Particulars		USD
Professional Fees (one-off fee) Review of due diligence documents, preliminary review and application for name reservation; Preparation and submission of all necessary paperworks to register the Company and application of Licences, provision of Constitution & Legal Certificates, receipt of Certificate of Incorporation and Licences, first Board Minutes, issue of first Share Certificates, FATCA and CRS classification.	4,000
Opening of first bank account	1,350
Government Fees:
ROC Processing Fee	350
Annual Fee payable to FSC- GBC Licence	1,950
Annual Fee payable to FSC – Fund licence	3,000
FSC Processing Fee – GBC Licence	500
MRA fee for the First time application of Tax Residency Certificate (“TRC”)	500
Total :	5,300
Optional
The above excludes Legal Fees if required

Annual Administration Fees

Particulars	USDAnnual
Provision for a Registered Office & Registered Agent	1,300
Provision for Company Secretary	1,300
Annual Responsibility fee for 2 Resident Directors	7,000
Provision for Money Laundering Reporting officer (MLRO)	3,000
Provision of a Compliance Officer	3,000
Review and Compliance Fees	750
Administrative Services (ensuring that the Fund complies with the licence conditions and Mauritius laws, Preparation of minutes of meetings, convening Board meetings, maintaining registers, etc)	4,000
Preparation of Tax Return	1,350
Renewal of Tax Residence Certificate	750
Annual Fee payable to the FSC – GBC	1,950
Annual Fee payable to ROC	350
Accounting & Investor Due Diligence Services
Retainer for preparation of annual accounts under IFRSMaintaining Accounting Records and Liaising with Auditors	USD 7,000

OTHER SERVICES	USD
Provision of Fully Serviced Office Space	1,200 monthly
Annual Fee : Provision of a nominee shareholder pp	2,000
Annual Fee : Provision of a nominee director pp	2,000
Notarization and Apostilation – Per set of document	330
Certificate of Good Standing	300
Certificate of Incumbency	200
Renewal of TRC	750
Bank Account opening outside of Mauritius	Price on Application
Power of Attorney	200/hr
Change of Director	200/hr

3. Mauritius GBC structured as a Special Purpose Fund

Set-Up Fee:

Particulars

USD

Professional Fees (one-off fee)

Review of due diligence documents, preliminary review and application for name reservation; Preparation and submission of all necessary paperworks to register the Company and application of Licences, provision of Constitution & Legal Certificates, receipt of Certificate of Incorporation and Licences, first Board Minutes, issue of first Share Certificates, FATCA and CRS classification.

15,000

Opening of first bank account in Mauritius

3,000

Government Fees:

ROC Processing Fee

350

Annual Fee payable to FSC- GBC Licence

1,950

Annual Fee payable to FSC – Fund licence

3,000

FSC Processing Fee – GBC Licence

500

MRA fee for the First time application of Tax Residency Certificate (“TRC”)

500

Total :

20,300

Legal Fees

The above excludes Legal Fees if required (in the range USD 10,000-15,000)

Annual Administration Fees

Particulars	USD Annual
Provision for a Registered Office & Registered Agent	1,300
Provision for Company Secretary	1,300
Annual Responsibility fee for 2 Resident Directors	7,000
Provision for Money Laundering Reporting officer (MLRO)	3,000
Provision of a Compliance Officer	3,000
Review and Compliance Fees	750
Administrative Services (ensuring that the Fund complies with the licence conditions and Mauritius laws, Preparation of minutes of meetings, convening Board meetings, maintaining registers, etc)	,000
Government Fees
Preparation of Tax Return	1,000
Tax Residence Certificate payable to MRA	500
Annual Fee payable to the FSC – GBC	1,950
Annual Fee payable to the FSC – Fund Licence	3,000
Annual Fee payable to ROC	275
Accounting and Other Fees
Retainer for preparation of annual accounts under IFRSMaintaining Accounting Records and Liaising with Auditors Calculation and Sign-off of NAV	10,000
Professional fees for due diligence on investors	USD 135 per investor

4. Mauritius GBC – CIS Manager

G. Incorporation Fee:

Particulars		USD
Professional Fees (one-off fee) Review of due diligence documents, preliminary review and application for name reservation; Preparation and submission of all necessary paperworks to register the Company and application of Licences, provision of Constitution & Legal Certificates, receipt of Certificate of Incorporation and Licences, first Board Minutes, issue of first Share Certificates, FATCA and CRS classification.	4,000
Opening of first bank account	1,350
Government Fees:
ROC Processing Fee	350
Annual Fee payable to FSC- GBC Licence	1,950
Annual Fee payable to FSC – Fund licence	3,000
FSC Processing Fee – GBC Licence	500
MRA fee for the First time application of Tax Residency Certificate (“TRC”)	500
Total :	5,300
Optional
The above excludes Legal Fees if required

H. Annual Administration Fees

Particulars	USDAnnual
Provision for a Registered Office & Registered Agent	1,300
Provision for Company Secretary	1,300
Annual Responsibility fee for 2 Resident Directors	7,000
Provision for Money Laundering Reporting officer (MLRO)	3,000
Provision of a Compliance Officer	3,000
Review and Compliance Fees	750
Administrative Services (ensuring that the Fund complies with the licence conditions and Mauritius laws, Preparation of minutes of meetings, convening Board meetings, maintaining registers, etc)	4,000
Preparation of Tax Return	1,350
Renewal of Tax Residence Certificate	750
Annual Fee payable to the FSC – GBC	1,950
Annual Fee payable to ROC	350
Accounting & Investor Due Diligence Services
Retainer for preparation of annual accounts under IFRSMaintaining Accounting Records and Liaising with Auditors	USD 7,000

OTHER SERVICES	USD
Provision of Fully Serviced Office Space	1,200 monthly
Annual Fee : Provision of a nominee shareholder pp	2000
Annual Fee : Provision of a nominee director pp	2000
Notarization and Apostilation – Per set of document	330
Certificate of Good Standing	260
Certificate of Incumbency	200
Renewal of TRC	750
Bank Account opening outside of Mauritius	Price on Application
Power of Attorney	200/hr
Change of Director	200/hr
Share Transfer	200/hr
Increase of Share Capital	200/hr
Standard charge in respect of disbursements	130
Amendment of memorandum of association	200/hr
Change of Company Name	400
Miscellaneous non-standard work in relation to company management to be carried out by a qualified member of staff as and when specifically requested by client (perusal, preparation, modification and issue of legal and commercial documents, correspondence, responses to third-party inquiries, and similar)	200/hr

Notes on our fees:

All fees will be subject annually to an indexation of 2%
All fees and hourly rates are exclusive of VAT and disbursements
FSC fee is payable in advance on incorporation on a pro-rata basis up to 30 June; For subsequent years, the annual licence fee is payable annually at latest by 30 June. In the event of late payment, a penalty will be chargeable by the FSC and thereafter the licence shall lapse and no other business can be transacted by the entity.
The ROC annual fee is payable by 10 January of each year.
The retainer covers the appointment of a Company Secretary; Any other administrative services will be charged on a time-spent basis.
Wherever retainer is mentioned in this proposal, it covers the minimum charge for the applicable service. Depending on the complexity and volume of transactions, additional charges may be claimed on an agreed time-spent basis.
Any other administrative work or professional services not specified above shall be charged on an agreed time-spent basis.
Fee schedules do not include external Auditors fees which vary depending on choice of auditor.
Fee schedules do not include legal costs (when required)
Local Director Fees should be added to fees should Directors Services be retained.

Customer Due Diligence Checklist

List A – Documents required for an individual

A certified true copy of the individual’s current valid passport, driving licence or national identity card. The document must be pre-signed and should bear a (clear) photograph of the person.
A recent original or certified true copy of the individual’s utility bill (dated not less than three months), bank or credit card statement or an original bank reference confirming his/her current residential address. Note that “P.O. Box” addresses are not accepted.
An original bank reference from a recognised banking institution bank which has known the person for at least the last two years, confirming that the bank account of the individual is currently in good standing.
Individual Questionnaire including declaration of source of funds (template to be provided by OCI upon signature of the fee proposal).
FSC Personal Questionnaire
Evidence of source of funds.
Detailed CV.
Signed FATCA/CRS Declaration form.

Enhanced Due Diligence measures

1. Signed declaration of source wealth.

2. Evidence of the source of wealth (i.e.; bank statements for the last 6 months).

List B- Documents required for a Company

Certified true copy of the Certificate Incorporation or Registration and certified true copy of the Company’s licence (where the latter is a regulated entity).
Original Certificate of Good Standing.
Certified true copy of the constitution or Memorandum and Article of Association of the Company.
Details of the registered office and place of business.
Copy of latest audited accounts or original signed Corporate Profile (template to be provided by OCI upon signature of the fee proposal).
Certified true copy of the register of directors
A certified true copy of at least two directors’ current valid passport, driving licence or national identity card. The document must be pre-signed and should bear a (clear) photograph of the person.

A recent original or certified true copy of the two directors’ utility bill (dated not less than three months), bank or credit card statement or original bank reference confirming his/her current residential address. Note that “P.O. Box” addresses are not accepted.

Certified true copy of the register of shareholders.
Complete set of due diligence documents (as per List A/B/C/D/E/F) on controlling shareholders of the Company.
Original or certified true copy of due diligence documents on the senior managing official of the Company.
Certified board resolution confirming the person authorized to act on behalf of the Company as well as a certified true copy of the proof of identification and proof of address (as listed in section A (1) and A (2)) of the authorised person.
Signed declaration source of funds (template to be provided by Redbird upon signature of the fee proposal) and evidence of source of funds.
Signed FATCA/CRS Declaration form.

Enhanced Due Diligence measures

Signed declaration of the source of fund and source of wealth of the Ultimate beneficial owner (“UBO”) together with the relevant evidences.
Bank Reference Letter of the UBO.

* The senior managing official will need to be identified by OCI in the event that the natural person who ultimately has controlling ownership interest in the Company cannot be identified.

List C- Documents required for a Trust

Certified true copy of the extract of the trust deed.
Certificate of registration, where applicable.
Details of registered office and place of business of the trustee.
Complete set of due diligence documents (as per List A/B/C/D/E/F) on principals of the trust (Trustees, Beneficiaries, Settlors, Protectors, Enforcers).
Original or certified true copy of due diligence documents on the senior managing official of the Trust.
Signed declaration of source of funds for Settlors/Contributor (template to be provided by OCI upon signature of the fee proposal) and evidence of source of funds.
Signed FATCA/CRS Declaration form.

List D- Documents required for a Partnership

Certified true copy of the partnership deed and certificate of registration (if registered).
Copy of the latest report and accounts.
Complete set of due diligence documents (as per List A/B/C/D/E/F) on the General Partners and the Limited Partners.
Original Certificate of Authority (signed by the General Partners) confirming the person authorized to act on behalf of the Partnership as well as a certified true copy of the proof of identification and proof of address (as listed in section A (1) and A (2)) of the authorised person.
Signed declaration of source of funds (template to be provided by OCI upon signature of the fee proposal) and evidence of source of funds.
Signed FATCA/CRS Declaration form.

List E- Documents required for a Société

Certified true copy of acte de société including profile of the Société.
Original Certificate of Good Standing.
Complete set of due diligence documents (as per List A/B/C/D/E/F) on the Principals, Administrators Gérants f the Société.
Original or certified true copy of due diligence documents on the senior managing official of the Société*
Original Certificate of Authority (signed by the Administrators or Gérants) confirming the person authorized to act on behalf of the Société as well as a certified true copy of the proof of identification and proof of address (as listed in section A (1) and A (2)) of the authorised person.
Signed declaration of source of funds (template to be provided by OCI upon signature of the fee proposal) and evidence of source of funds.
Signed FATCA/CRS Declaration form.

Enhanced Due Diligence measures

Signed declaration of the source of fund and source of wealth of the UBO together with the relevant evidences.
Bank Reference Letter of the UBO.

List F- Documents required for a Foundation

Certified true copy of the Foundation Charter and certified true copy of the Certificate of Registration (if registered).
Copy of the latest report and accounts of the Foundation.
Complete set of due diligence documents (as per List A/B/C/D/E/F) on the Founder, members of the Council and beneficiaries of the Foundation.
Original or certified true copy of due diligence documents on the senior managing official of the Foundation
Signed declaration of source of funds (template to be provided by OCI upon signature of the fee proposal) and evidence of source of funds.
Signed FATCA/CRS Declaration form.

Enhanced Due Diligence measures

Signed declaration of the source of fund and source of wealth of the UBO together with the relevant evidences.
Bank Reference Letter of the UBO.

REDUCED OR SIMPLIFIED CDD

Regulated financial services business based in Mauritius or in an equivalent jurisdiction (i.e. subject to the supervision of a public authority)

1. Proof of existence.

2. Regulated status.

3. Signed FATCA/CRS Declaration form.

Public companies listed on Recognised Stock / Investment Exchanges.

1. Proof of existence.

2. Proof of listing status.

3. Copy of latest annual report and account.

4. Original Certificate of Authority (signed by the directors) confirming the person authorized to act on behalf of the Public Company as well as a certified true copy of the proof of identification and proof of address (as listed in section A (1) and A (2)) of the authorised person.

5. Signed FATCA/CRS Decdaration form.

Government administrations or enterprises and statutory body

Certified copy of the Charter or Constitutive Document or Enactment which established the body.
Original Certificate of Authority (signed by the directors) confirming the person authorized to act on behalf of the Public Company as well as a certified true copy of the proof of identification and proof of address (as listed in section A (1) and A (2)) of the authorised person.

Note: Enhanced due diligence measures may be carried out by OCI on politically exposed persons (PEPS), non-face-to face business relationships, NCCT and non-equivalent jurisdictions, where adverse information is obtained, etc. In these circumstances, OCI reserves the right to request further information and documents, irrespective of percentage shareholding.

Note: Certification can be done either by a lawyer, notary, banker, or an accountant holding a recognised professional qualification; a serving police or customs officer; a member of the judiciary; a senior civil servant; an employee of an embassy or consulate of the country of issue of identity documentation.

Would you like to know more? Then please Contact Us:

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

Mauritius Special Purpose Funds Framework

Two weeks ago we looked at the various options for the set-up of Investment Funds in Mauritius. Today we drill down to take a close look at the SPF ie Mauritius’s version of an Incubator Fund (ie a Start Up Fund aimed primarily at first time Fund Promoters and or Successful Traders looking to spread their wings by taking on/trading investor funds for the first time)

1. What is a Special Purpose Fund (“SPF”)?

New measures announced in the 2019/2020 Mauritius National Budget included the modernising of the existing Special Purpose Fund regime to provide further flexibility and ease access to new markets.

In line with this measure and its object to study new avenues for the development of the Financial Services Sector, the Mauritius Financial Services Commission (“FSC”) issued the Financial Services (Special Purpose Fund) Rules 2021 to govern “Special Purpose Funds” (“SPFs”), effective as from 6 March 2021. These new rules have replaced the Financial Services (Special Purpose Fund) Rules 2013.

An SPF is a Collective Investment Scheme (“CIS”) or a Closed-End Fund (“CEF”) which is authorised by the FSC as a Special Purpose Fund.

2. What are the requirements for a CIS/CEF to be authorised as an SPF?

The FSC may authorise a CIS or a CEF as an SPF if the fund will:

a. offer its shares, solely by way of private placements, to investors having competency, significant experience and knowledge of fund investment;

b. have a maximum of 50 investors and a minimum subscription of USD 100,000 per investor;

c. at all times, firstly be managed by a CIS manager; and secondly be administered by a CIS administrator;

d. comply with any such other conditions as may be imposed by the Commission.

3. Can an SPF invest in Mauritius?

Yes, investments can be made within as well as outside of Mauritius while benefitting from tax exemption provided in the Income Tax Act.

4. Can a Global Business Company (“GBC”) be authorised as an SPF?

A CIS/CEF holding a Global Business Licence can seek authorisation as an SPF if the Fund/Company is meeting the relevant requirements.

5. What are the on-going obligations of an SPF?

An SPF must comply with the provisions of the Financial Services Act, the Securities Act 2005 and the Securities (Collective Investment Schemes and Closed-end Funds) Regulations 2008 in so far as the provisions relate to a CIS and CEF.

In addition, an SPF must ensure that it abides by all provisions of the Financial Services (Special Purpose Funds) Rules 2021.

Furthermore, the submission of the Audited Financial Statements of an SPF must be accompanied by certificates from the SPF’s directors and auditors to confirm that the SPF is in compliance with the abovementioned rules and substance requirements referred to in point 8 below.

6. Can an SPF present its financial statements in a currency other than the Mauritius currency?

Yes. This is permissible subject to approval being granted by the Registrar of Companies in accordance with the provisions of the Companies Act 2001.

7. What happens if the CIS/CEF no longer fulfils the requirements/conditions under which it was authorised as an SPF?

Without prejudice to its powers under the relevant Acts, where a CIS/CEF, which was authorised as an SPF no longer, fulfils the requirements/conditions under which it is authorised, the FSC may withdraw its authorisation as an SPF.

8. What are the substance requirements of an SPF?

An SPF, its CIS manager and its CIS administrator shall carry out their relevant core income generating activities in, or from Mauritius, and shall:

a. employ directly or indirectly an adequate number of suitably qualified persons to conduct such core income generating activities; and

b. incur a minimum expenditure proportionate to the level of such activities.

9. Is there any new/additional application form to be filled-in by an SPF?

There is no new/additional application form to be filled-in by an SPF. An SPF will have to fill-in only the current application form and pay the applicable processing fee so as to be authorised as a CIS/CEF. Once authorised, an SPF will have to pay the annual fee applicable to the CIS/CEF authorisation and an additional annual fee of MUR 200,000 (USD 5,000 for a holder of a Global Business Licence).

10. Does an SPF benefit from tax incentives?

An SPF, as well as a certain category of investors in the SPF, will benefit from tax exemptions as provided in the Income Tax Act.

Would you like to know more? Then please Contact Us:

www.offshoreincorporate.com

info@offshorecompaniesinternational.com

How To set up an Online or Telehealth Medical Practice Offshore

Are you a practising GP/Family Doctor?

Are you thinking post Covid of ways to move online and or to reduce your overall tax burden?

If so, once can easily understand where you are coming from/what you are thinking…. If I can deliver all or most of my services online why live/pay tax in a high tax jurisdiction?

There are 2 aspects to this. The first is the issue of physical residence. The second is the issue of tax residence.

First you need to identify places where you could reside in that are nil tax or tax friendly. Then you’d need to check out their residency programs and whether you’d qualify for residency rights.

There are a number of jurisdictions where one can live exotically and free from tax. Many of the nil tax havens you’ve probably heard of or read about in novels… You may even have holidayed in some of them! They include:
• The Cayman Islands
• St Kitts and Nevis
• Dubai
• Monaco
• The Bahamas
• Bermuda
• Vanuatu
• The Turks & Caicos Islands
• Anguilla

Countries with no Income Tax

The below mentioned countries generally speaking do not levy a tax on income regardless of where the income is/was sourced:

UAE
Qatar
Oman
Kuwait
Cayman Islands
Bahrain
Bermuda
The Bahamas
Saudi Arabia
Brunei Darussalam

Countries That Don’t Tax Offshore Income

Another option is to live/base yourself in a country which has a territorial tax system (ia country which only taxes you on locally sourced income) and run your business income through a (tax free) Offshore company. Hong Kong is an example of such a place. Singapore is another. Panama would also be in the discussion as would the UAE be. Other examples include:

Costa Rica

Gibraltar

Hong Kong

Malaysia

Nicaragua

Panama

Paraguay

San Marino

Singapore

Seychelles

In such a scenario all your business sales in the first instance would run through a tax-free Offshore Company. Thereafter you should only (maybe) have to report/pay tax locally on any salary paid to you by the Offshore Company.

To be able to live in such a place you’d need to obtain a residency permit or citizenship. We can assist you to obtain residency rights in Panama and the UAE. We can also assist you to apply for citizenship in Nevis.

Second Issue

The next thing you need to would be to take steps to ensure that you effectively exit the local tax system. From a taxing rights perspective in terms of which country has the rough to tax you the question isn’t where I am residing (or where do I have a residency permit for) but where am I resident for tax purposes.

We are often asked by individuals where (ie in what country/s) am I liable to pay tax?

The starting point it this: If you are regarded at law to be tax resident (ie resident for tax purposes) in a particular country you are liable to pay tax there on your (usually, worldwide) income.

The concept of tax residency however (ie what it takes to be classified as non-tax resident) varies from country to country. Depending on where you originate from you may pass the non-tax resident test of one country but fail the same test had you originated from the country next door.

Let me explain….

The most well-known tax residency test is in fact the oldest ie the days spent at home test. Historically, in most countries (USA excepted – see below), you were considered non-tax resident if you spent less than half the year inside your “home” or mother country.

Over the years, and particularly with the proliferation of “fly in-fly out” jobs (seen most prevalently in the oil/mining industries) a number of countries (in particular the more developed countries) have brought into play a multifaceted tax residency test. In other words notwithstanding that you might spend less than half the year on the ground in your mother country if you have a “substantial connection” with your mother country you may still be classified as tax resident of/in that country.

So what constitutes “substantial connection”?

In considering whether you still have a “substantial connection” to your mother country a number of factors are looked at including:

Do you retain a residency/home in your mother country?
Do you own any personalty in your mother country (eg a car, furniture/home contents/boat/leisure toys etc etc)
Do you have a bank account in your mother country?
Do you have investments or business interests in your mother country?
Do you retain a professional or trade license (eg Lawyer/Plumber/Doctor/Teacher/Nurse/Engineer/Architect/Builder/Dentist etc) license in your mother country?
Do you keep current a golf/tennis/leisure club membership in your home country?
Do you regularly renew a driver’s license in your home country?
Do you have children at school in your home country?
Do you have a spouse/partner living full time in your home country?
Etc etc etc

Chances are, as a minimum, what you will need to do in order to become non-tax resident in your mother country is:

(a) Sell your home/residence in your mother country (or cancel any lease you might have over residential premises there)

(b) Sell any business you own on the ground in the mother country

(d) Hand in (and not renew) any professional/trade license you may have in your mother country

(e) Close down any bank/investment accounts you might have in your mother country

(f) Write to your local IRS/Tax Office and advise that you have departed the country permanently and filed your last tax return.

For USA citizens however a unique situation applies. Generally speaking, if you are a US citizen you are required to declare worldwide income in and pay tax in America regardless of (a) whether you spend less than half the year there and (b) whether you have no substantial connection with the USA. (For Americans the only way to be classified as “non tax-resident” of the US is to hand in your passport and denounce your citizenship).

All that said we are not tax advisers or financial advisers. Before committing to move abroad we’d advise you to seek advice from a local Tax Lawyer and a local tax Accountant (ie both in the country where you are departing from and the country where you are going to).

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Mauritius Investment Funds Setup Options

Over the course of the past 20 years+ the reputation of the central Indian Ocean Islands Financial Centre of Mauritius has indeed blossomed.

Led by an innovative Financial Services authority and boasting political stability and low taxes – alongside a powerhouse and stable economy – Mauritius has become a popular jurisdiction for fund managers, institutional investors, entrepreneurs and private investors looking to set up Private Funds, Blockchain enterprises or Fiduciary structures. In recent years – thanks to vibrant new laws, quality service providers, value for money pricing and solid banking infrastructure – Mauritius has increasingly become a/the jurisdiction of choice for Fund Managers and Traders looking to set up traditional funds, start-up funds and alternative investment collectives.

If you are a Fund Manager or successful Trader looking to kick off a Hedge Fund or Private Fund structure this article will provide you with an overview of the various Fund structures on offer in Mauritius.

Key advantages of Mauritius

Low tax – A Partial Exemption Regime is applicable to domestic and global business companies ie GBCs – 80% of foreign-source income from collective investment schemes (CIS), closed-end funds (CEFs), CIS manager or administrator will be exempted from income tax. And a tax rate of just 3%.
No capital gains tax and no withholding tax on dividends and interest
No exchange controls
Innovative well drafted legislation and a British Legal/Court system
Advantageous time zone for global markets (GMT +4)
Low-cost jurisdiction for services
Minimal red tape/Business friendly set up procedures
Wide Range of Fund structuring options (Global CIS, Professional CIS, Specialised CIS and Expert Fund)

How to set up a Collective Investment scheme in Mauritius

An Investment Fund if incorporated/established in Mauritius is regulated as a “Collective Investment Scheme” – CIS.

A Collective Investment Scheme’s aim is to pool capital from accredited investors or institutional investors and to infuse such funding in a variety of assets, often with complex portfolio-construction and risk management techniques thus diversifying its investment risk whilst at the same time ensuring an absolute return objective.

Essentially, such a CIS is structured with an elastic capital and provides its subscribers the freedom to exit at any time based on the NAV (Net Asset Value).

Sub-categories of CIS:

Professional CIS: A Professional CIS is a CIS which offers it shares solely to sophisticated investors or as private placements
Specialised CIS: A Specialised CIS is one that invests in real estate, derivatives, commodities or any other product authorized by the Mauritius Financial Services Commission (FSC)
Expert Fund: An Expert Fund is a Fund which is only available to expert investors. As per the Securities Act 2005 (‘SA 2005’), an expert investor means: a. an investor who makes an initial investment, for his own account, of no less than USD 100,000; or b. a sophisticated investor as defined in the SA 2005 or any similarly defined investor in any other securities legislation
Public CIS: A CIS other than sub-categories (1), (2), (3) above, and which is fully regulated and meant mainly to be offered to the public (Such a CIS may be referred to as a “Public CIS”).

Would you like to know more? Then please Contact Us:

www.offshoreincorporate.com

info@offshorecompaniesinternational.com