Taxation in an offshore zone using the example of Mauritius
The state of Mauritius is a promising area for financial activities. The presence of a developed infrastructure and active support of companies from regulatory authorities allow them to engage in brokerage activities effectively – all this leads to the fact that many organizations prefer a Forex license in Mauritius. And one of the main advantages is taxation.
What taxes will licensed companies have to pay?
This area is considered a promising jurisdiction, especially for offshore companies, thanks to its tax policy. Taxation allows you to significantly reduce tax obligations and thereby increase the profitable part of the company. Payment of taxes here is subject to the Income Tax Act established in 1995. Corporate tax is 15% of the organization’s income, but for offshore companies, the rate will be only 3%. It is what attracts offshore brokers to this area.
In addition, there are unique benefits that will exempt the business from paying taxes. No tax will be charged if the organization is not a resident of this area. To avoid double taxation, Mauritius has agreed with many countries worldwide, which also considers different rules for the financial activities of brokers. Organizations will also not have to pay tax on their dividends and capital gains.
It is worth noting that in this state, it is necessary to comply strictly with tax legislation: file a tax return and pay the required taxes on time. If a company ignores tax laws, it will be subject to various sanctions, which will entail significant financial losses and restrictions in economic activities.
What is licensing, and how long will it take?
Receiving a document is not difficult; you must comply with all the demands and correctly fill out the provided documents. The FSC regulator is responsible for licensing. Let’s look at what is required to obtain licensing successfully.
Prepare preliminary documents (1 week)
At this stage, you will need to choose a unique name for the firm and provide some papers. The management team and shareholders must submit copies of identification papers and a certificate of registration (this can be confirmed by paid utility bills). You should also prepare a two-page business project for the firm and show its structure.
Select staff and set up the company’s activities (approximately 1 month)
It is necessary to register a firm and prepare corporate papers. It will also be required to search for staff and appoint two local directors. You will also need to register an office (purchase or rent) and provide for the presence of a secretary.
Licensing (approximately 5 months)
At this stage, you must provide the documents the Regulator requires for licensing. Implementing an AML (anti-money laundering) and KYC (know the client by sight) program into the company’s activities is essential. Next, you can apply for a permit to the FSC. You will also have to work closely with the Regulator and provide additional data if necessary.
Open a bank account (1 – 1.5 months)
To make a successful choice, reviewing several banks to compare them with each other is recommended. It is essential that your firm meets the demands of the bank you choose and that it has an AML policy. The authorized person from the beam will request to provide some documents, which will include the following:
- movement of financial flows;
- confirmation of the legality of the source of capital;
- indicate why you needed to open an account;
- list the main partners;
- provide paid utility bills.
It is essential that during the process of opening a bank account, constant support is provided by an authorized person from your company.
Authorized capital and annual fees
As a rule, there are no demands for the size of the authorized capital for offshore brokerage organizations. However, the Regulator can assess the degree of financial risks associated with your company’s activities and set individual requirements for the firm. It mainly concerns the minimum amount of authorized capital, which must be at least 18,000 US dollars. In addition, the company will have to pay a licensing fee each year that must exceed 25,000 USD. And this amount will depend on the type of permitting and firm structure. Obtaining a permit for brokerage activities will also have to be paid in the amount of 6,550 USD.
If you fulfill all the demands of the regulatory authorities and provide a complete package of papers, obtaining a permit will be successful. The main thing is to comply with local legislation, and there will be no obstacles to financial activities. And loyal taxation will allow you to profit more than other jurisdictions.