The Mauritius global business sector is described abroad in language that stopped being accurate several years ago. The deemed foreign tax credit that produced the familiar three per cent effective rate for Category 1 licence holders, a foreign tax presumed at eighty per cent of the Mauritius tax, was abolished with effect from 1 January 2019, surviving only to 30 June 2021, and with exclusions, for licences issued on or before 16 October 2017 under the transitional regulation 10 of the Income Tax (Foreign Tax Credit) Regulations 1996. What replaced it is a partial exemption that, for most of the income it covers, is available only on stated conditions, and those conditions are a substance test in everything but name.
This is written for someone who already has a Global Business Company, or who is being asked whether the one in their group chart still does what it was set up to do. The answer is usually yes, but on terms that require an annual demonstration rather than a licence renewal. The distinction between the two is the whole subject.
The rate, and where the relief now comes from
The same date removed the Category 2 Global Business licence altogether under the Finance (Miscellaneous Provisions) Act 2018, whose saving provision, inserted as section 96A of the Financial Services Act 2007, let licences issued on or before 16 October 2017 run until they lapsed on 30 June 2021, with the tax exemption preserved by section 161A(57) of the Income Tax Act 1995 only to 30 June 2021 for companies licensed on or before 16 October 2017, and withheld even then, as the Director-General may determine, from intellectual property acquired or created after stated dates and from income on assets acquired or projects started after 31 December 2018. Anyone still describing a structure by reference to a Category 2 company is describing something that no longer exists. The substance conditions attaching to the replacement regime are prescribed under Regulation 23D of the Income Tax Regulations 1996, which is where the analysis now begins.
The Mauritius Revenue Authority publishes a corporate income tax rate of fifteen per cent, with a three per cent rate for the export of goods applicable with effect from 1 July 2017. That fifteen per cent is the starting point for a Global Business Company, and there is no separate reduced rate attaching to the licence.
The relief is a partial exemption of eighty per cent, or ninety five per cent for interest derived by a collective investment scheme or closed end fund licensed or approved by the Financial Services Commission, applied to specified income streams listed in Part II of the Second Schedule to the Income Tax Act rather than to the company. The streams include foreign source dividends, interest subject to restrictions for certain financial institutions, income from peer to peer lending, profits attributable to a foreign permanent establishment, income from the leasing of ships, aircraft and locomotives, reinsurance activity and the leasing of international fibre capacity.
The structural point is that the exemption is applied stream by stream. A company with three sources of income has three analyses, and the fact that one stream qualifies tells you nothing about the others. Since 9 August 2025 the Act says so expressly for interest: item 7(c) of Sub-part B grants the exemption provided the relevant activity of the company generating the income satisfies the substance requirements. Groups that treat the exemption as an attribute of the entity misprice the file.
The conditions are the substance test
The Revenue Authority states three conditions, and regulation 23D(2) requires a company to satisfy all of them for interest and for the other streams it lists, among them ship and aircraft leasing, reinsurance, international fibre capacity and fund income. It must carry out its core income generating activities in Mauritius. It must employ, directly or indirectly, an adequate number of suitably qualified persons to conduct those core income generating activities. And it must incur a minimum expenditure proportionate to its level of activities.
Foreign dividends are governed by a separate paragraph. Under regulation 23D(1) the company must comply with its filing obligations under the Companies Act or the Financial Services Act and have adequate resources for holding and managing share participations, and the Schedule adds that the dividend must not have been allowed as a deduction in the country of source. The Schedule items for profits of a foreign permanent establishment and for peer to peer lending interest do not themselves refer to substance conditions, which is a further reason to run the analysis stream by stream.
None of those is a number. Adequacy and proportionality are assessed against what the company actually does and what it earns from doing it, which means a company that has grown its income without growing its Mauritius footprint has drifted out of compliance without any decision having been taken. The condition is dynamic and the company is static, and that is how most failures happen.
The reference to employing persons directly or indirectly, read with the outsourcing rule in regulation 23D(3), is what permits reliance on a management company, and it is the one most often over-read. It permits the resources of a service provider to count, provided the outsourced activities are conducted in Mauritius. It does not permit the same hours to count for a dozen companies, since the regulation bars a provider’s substance from being counted multiple times by multiple companies, and it does not relieve the licensee of demonstrating what those hours were spent on, because the company must be able to show adequate monitoring of what it outsourced. A management agreement written before this mattered will not produce that evidence, and the time to renegotiate it is at renewal rather than at enquiry.
What the licence itself requires
The licence carries substance conditions of its own, separate from the tax ones, and they apply for as long as the licence is held. Section 71(3) of the Financial Services Act 2007, as substituted by the Finance (Miscellaneous Provisions) Act 2018 and amended by the Finance (Miscellaneous Provisions) Act 2019 and since further amended, requires the holder of a Global Business Licence at all times to carry out its core income generating activities in, or from, Mauritius as required under the Income Tax Act, to be managed and controlled from Mauritius, and to be administered by a management company. In deciding whether the company is managed and controlled from Mauritius, the Financial Services Commission has regard to such matters as it deems necessary and in particular to whether the company has at all times at least two directors resident in Mauritius of sufficient calibre to exercise independence of mind and judgement, maintains its principal bank account in Mauritius, keeps its accounting records at its registered office in Mauritius, prepares its statutory financial statements and has them audited in Mauritius, and provides for meetings of directors to include at least two directors from Mauritius.
Two points are worth dwelling on. The two resident directors are the mechanism through which the company is expected to be directed from Mauritius, and their function is not satisfied by signature. A director who receives resolutions drafted elsewhere and signs them as presented is evidence that the company is directed elsewhere, which is precisely what the file is meant to disprove.
Any business plan and forecasts filed with the application are the second. In most files they are never revisited. They are nevertheless the group’s own statement of what the company was going to do, and where the actual activity has diverged from it the divergence should be explained in the company’s own records rather than discovered by someone else.
What no longer works
Three arrangements that were once ordinary no longer survive contact with the current rules.
The first is the company whose only Mauritius presence is its registered office and its administrator, holding shares in operating businesses elsewhere and claiming treaty relief on the dividends. That structure is exposed on the substance conditions on their own terms, both the licensing condition that core income generating activities be carried out in, or from, Mauritius as required under the Income Tax Act and, for its dividends, the requirement of adequate resources for holding and managing share participations, and it may fail the beneficial ownership analysis conducted by the source state before anyone reaches the Mauritius question.
The second is the financing vehicle capitalized with a back to back loan from the group, earning a spread it neither controls nor could absorb if the borrower defaulted. The arm’s length analysis applied in the counterparty jurisdictions leaves that entity with a service return, and the partial exemption on interest, if it is available at all, is then applied to a much smaller number than the model assumed, because regulation 23D(2) counts managing any risks among the core income generating activities that the company must carry out in Mauritius for the exemption on interest.
The third is the licence held in reserve. A dormant Global Business Company kept for optionality still has filing obligations, still costs its annual fees and administration, and still appears in the group chart of every transaction the group enters into for as long as it exists. Where there is no present use for it, the honest options are to give it a genuine function and resource it, or to wind it up.
How the file is read from Europe
For a European group, the Mauritius entity is rarely examined first. It is examined because something else drew attention, and then it is examined thoroughly.
The questions are predictable. Who decided the transactions the company entered into, and where were they physically when they decided. What did the company spend in Mauritius, and on what. How many people worked on this company’s activity, and how is that number evidenced rather than asserted. What functions does the transfer pricing documentation attribute to the entity, and do the minutes show anyone in Mauritius performing them. Whether those questions are asked under a domestic anti-abuse rule, under a principal purpose test or under an arm’s length analysis, they are the same questions.
Mauritius does not appear on the Dutch list of designated low tax jurisdictions in force from 1 January 2026, which names Anguilla, the Bahamas, Bahrain, Bermuda, the British Virgin Islands, Guernsey, the Isle of Man, Jersey, the Cayman Islands, Turkmenistan, the Turks and Caicos Islands and Vanuatu on the low tax limb. That absence is worth knowing, because it means the Dutch conditional withholding tax on interest, royalties and dividends is not triggered on that ground by payments from a Dutch entity to a Mauritius affiliate. It is not a general clearance. The designation test in article 1.2 of the Wet bronbelasting 2021 looks at whether a state, on 1 October of the preceding calendar year, subjects entities to no profit tax or to one at a rate below nine per cent, or appears on the EU list of non-cooperative jurisdictions, and the designation is made by ministerial regulation on that basis, so the position should be checked each year against the list then in force rather than assumed.
Treaty access is decided somewhere else
The Mauritius treaty network is the reason many of these companies exist, and it is the part of the structure over which Mauritius has the least control. Whether a source state grants relief on a dividend, an interest payment or a capital gain depends on that state’s own anti-abuse provisions, on its reading of beneficial ownership and, where the treaty has been modified by the Multilateral Instrument or renegotiated to the same effect, on a principal purpose test.
That has a practical consequence for how the Mauritius file should be built. It is not enough for the company to satisfy the Revenue Authority that the partial exemption conditions are met. The same file has to be capable of persuading a revenue authority that has no interest in Mauritius that the company is the real recipient of the income and that obtaining the treaty benefit was not one of the principal purposes of the arrangement, which is the formulation in Article 7(1) of the Multilateral Instrument, or that granting it would accord with the object and purpose of the treaty. Those are related but not identical burdens, and a file assembled only for the first will look thin against the second.
What a defensible file contains
The test is whether the file can be handed to a reviewer without narration. Board minutes recording deliberation in Mauritius, including matters the board considered and declined, rather than resolutions circulated for signature. A record of where each director was when each decision was taken. A statement of the company’s income by stream, with the exemption analysis performed separately for each. A calculation of the persons engaged on the company’s core income generating activities, supported by the management company’s own time records, with a confirmation that the same time was not allocated elsewhere.
To that should be added an annual expenditure figure with an explanation of why it is proportionate to the level of activity, and a note comparing the current activity with any business plan filed on application. Where the two have diverged, the explanation belongs in the company’s records with a date on it.
None of this argues for or against holding a company in Mauritius. It sets out what holding one now costs in administration. The jurisdiction still works, for groups with genuine activity in the regions it serves and a willingness to fund the presence the relief is conditional on. What has ended is the version in which the licence did the work and the company did nothing.
This article is informational and does not constitute tax or legal advice. The treatment of any structure depends on its facts and on the law of each jurisdiction involved. Each engagement is subject to scope and applicable regulation.