Setting up a Mauritius Foundation
Tetra Consultants assists our international clients to set up Mauritius Foundation. Our service package includes:
- Registration of the Foundation with Mauritius’ Registrar of Companies, the Corporate and Business Registration Department
- Local company secretary and registered company address
- Local management company and registered agent
- Nominee founder services
- Annual accounting services
What is a Foundation?
- A Foundation is a legal entity with its own organization and without members. It is established when the Founder transfers the ownership of assets to the Foundation. Foundations are a relatively newer form of company structure and were traditionally used by organizations such as charities to fund grants and other philanthropic goals. With the rise of capital controls and unfavourable tax rates in many regions, private foundations have risen to eminence as a viable form of personal wealth management and protection, replacing other structures such as privately owned companies and trusts. It is commonly used by our international clients to protect their assets against personal liability, high taxes, foreign exchange controls and risk of confiscation.
Foundation vs Corporations
Lower compliancy cost and tax rate
- In Mauritius, foundations are cheaper, easier, and faster to incorporate for foreigners as compared to using a Global Business Company (GBC). Authorized Companies are not suited for this purpose since such companies are prohibited from operating financial services and would also incur higher tax rates due to a lack of tax exemptions. Even though the annual registration fee for a foundation and a GBC are both US$300, the GBC faces more requirements from the Financial Services Commission Mauritius in incorporation and compliancy that will make it harder and more expensive to upkeep. A GBC must be prepared for regular auditing and financial reporting in order to enjoy the 3% corporate tax rate, as well as maintain a substantial fiscal presence in the region through employment of a Mauritius resident and domestic expenditures.
Foundation vs Trusts
Superior liability protection and legal certainty
- As compared to a trust, a foundation represents a distinct legal entity from the owner, and thus limits liability of the councillors or owners. In being a separate legal personality, foundations also offer more certainty due to its tangibility. This minimizes legal issues that trusts would typically face over its validity or legitimacy. However, this does come at the expense of the foundation needing to be publicly registered in Mauritius whilst a trust does not. This is mitigated by the permissibility of nominee directors. Clients that wish to have more privacy in their affairs and not have their name in public records or documents may opt to do so.
Superior continuity for long term succession planning
- Foundations also offer continuity and easy succession since they have an infinite duration once incorporated and do not come with the same perpetuity period a trust usually would have. Non-charitable trusts in Mauritius only have a standard perpetuity period of 25 years.
Why set up Mauritius Foundation?
Supportive governmental policies and economic climate in Mauritius
- Within the Sub-Saharan African region, Mauritius ranks as the best to do business in, and is also one of the least corrupt. On a larger scale, it does not fare too poorly either, being 13th in the World Bank’s 2020 Ease of Doing Business Index.
- The Mauritian government’s recent efforts to expand the spectrum of financial services options in the country have been well supported by legislative and regulatory policies such as the enactment of the Mauritius Foundation Act in 2012. These efforts have borne fruit and allowed the Mauritian economy to develop beyond an agrarian dependent to one of the world renowned names in financial services, having received over $1 billion in investments to its banking sector, and attracting big names such as Barclays, HSBC, and Standard Chartered. As a result of this, the banking and legislative system in the country are definitely more than qualified and experienced in dealing with foreign investors and will be able to smoothly process your application.
Mauritian financial services sector
- Trading in Mauritius, and under the name of a Mauritian foundation also has its benefits. Thanks to the good work of the Financial Services Commission Mauritius, the financial sector in Mauritius is fairly regulated and transparent. This has attracted a large number of foreign investments and securities which will offer more options to your foundation. This also offers certainty and security that you can rely on knowing that appropriate measures have been put into place to protect your assets and help you stay adherent to the European Union’s Anti-money Laundering and Counter Terrorist Financing laws, ensuring the compliance of your operations.
Intrinsic benefits of operating as a Mauritius foundation
Asset protection and privacy
- Mauritian foundations also offer a high degree of asset protection and privacy due to Mauritian confidentiality laws. Companies can rest assured that all information submitted to the Corporate and Business Registration Department (Mauritius Registrar of Companies) will not be publicly accessible. An added layer of privacy comes from the permissibility of nominee directors. This name can be used on any public documents that need to contain the director’s name.
- Taxation policy is Mauritius is highly suited for estate planning and wealth management purposes. This is because Mauritian foundations are exempt from tax in Mauritius if the founder and beneficiaries are non-resident, and there is no inheritance or estate tax.
Retirement planning and Mauritian residency
- Establishing a Mauritius foundation also opens up the option for Mauritian residency. Through the Mauritius Investment Residency Program, you can be granted permanent residency after making a minimum investment of US$500,000. Additional dependents can be registered for US$100,000 each, and the permanent residency can even be upgraded to citizenship after 2 years without needing to stay in the country. The Mauritian passport offers visa-free travel within the Schengen Area. Mauritius is also one of the most attractive places to retire in, boasting a high standard of living and socio-political stability alongside efficient and modern public services and infrastructure.
Our international clients choose to set up a Mauritius Foundation as it gives them the protection and ease for long-term wealth management. Family assets are well planned and preserved over generations while enjoying tax efficiency. Once the Mauritius Foundation is successfully set up, you can own and manage any companies, family businesses or wealth.
- All Mauritius Foundations shall end with the word “Foundation” or equivalent in another language. It cannot contain the word “limited” or “partnership” that would usually denote a for-profit organization.
- It is necessary to appoint a local management company to be the secretary of the Foundation. They can also be a suitably qualified local resident authorized to take up such appointments by the Financial Services Commission Mauritius.
- It is mandatory to have a registered office address in Mauritius.
- It is required to have at least one member of the Foundation Council to be resident in Mauritius.
How do I start a foundation business?
Tetra Consultants will assist our international clients to register the Mauritius Foundation with the Registrar of Companies. Prior to registration, Tetra Consultants will provide a locally registered address in which all correspondence from government and banks will be addressed to.
- According to the Mauritius Foundations Act 2012, all Mauritius Foundations are required to have a Foundation Council to administer the property of the Foundation and carry out duties of the Foundation. The Foundation Council is the most essential component of any Foundations. Members in the Foundation Council do not have any personal title to a Foundation’s asset. Simply put, Foundation Council is equivalent to the Board of Directors in a company. However, the difference is that the members of the Foundation Council are not shareholders. It is important to note that it is mandatory for at least one member of the Foundation Council to be ordinarily resident in Mauritius.
Drafting of Charter
- The Charter (the equivalent of a company’s Memorandum and Articles of Association) of the foundation must also be drafted. This is a written document setting forth the crucial operational elements of the foundation, and should contain details such as details of the founder, beneficiary, council and secretary, purpose and objective of the foundation, registered office address and initial endowment details.
Submission of application
- After this, the application for registration can be submitted to the Mauritian Registrar of Companies, the Corporate and Business Registration Department. This must be accompanied by the registration fee of US$300.
Endowment of assets
- Once done, founders can endow assets to the company, which usually consist of company shares, investments, real estate, insurance policies and other assets.
Accounting and tax obligations
- The Founder can declare to the Commissioner of Income Tax that the Foundation is non-resident. As such, both the Mauritius Foundation and its distributions to non-resident beneficiaries will be exempted from income tax assuming the assets are held outside of Mauritius. This declaration should continue to be filed annually, within three months of the end of every tax year.
Accounting records and transaction history
- Proper accounting records of sums of money received, expended and distributed must be kept, along with the total assets and liabilities, as well as any transactions made by the foundation. These transactions will not be accessible to public, but may be viewed by the councillors, founder or any person holding any other supervisory role.
Alternatives to Mauritius Foundation
Despite its best efforts to reform, Mauritius retains a certain degree of association with offshore tax havens, and this might result in additional scrutiny from tax authorities and banks. In any case, it has made certain reporting procedures more stringent which might pose a hassle for investors.
United Arab Emirates
- The United Arab Emirates (UAE) is another stable and wealthy economy, and is considered the be the financial hub of the Middle East. It does not have the same associations with being a tax haven despite having zero corporate tax for firms earning below US$270,000. Set-up costs are comparable at US$1,150 but minimum capital is higher at US$100,000. It might require you to be physically present during bank account opening, but the benefit of this is that it would speed up the process considerably, allowing you to get your company and account set up in around a week.
- Luxembourg is one of the few options available for those keen on establishing their firm in Europe as it is one of the few to not impose restrictions on non-resident bank accounts. They offer a variety of high quality banking products, but this does come at a higher cost of US$2,000 to set-up as compared to other jurisdictions.
Tetra Consultants advises our international clients on the formation of Mauritius Foundation and provide customized solutions to achieve tax efficiency while protecting your assets. Contact us now for a free consultation. Our team of experts will revert within the next 24 hours.
How can I make my foundation successful?
- The success of a foundation ultimately lies with the Council since they are responsible for the operating activities of the foundation.
What is a foundation in Mauritius?
- A foundation is usually established for asset protection, succession planning and wealth management, offering several additional perks such as lower tax rates, privacy and asset protection.
What is a Beneficiary?
- A beneficiary is the ultimate recipient of the Foundation’s assets.
What is a Protector?
- A protector is one who has been specifically appointed to oversee and account for the operations of a foundation, and veto decisions if necessary.
What is a Charter?
- A charter is the publicly filed constitutional document stating the founder’s name and foundation’s purpose, similar to a corporation’s articles of association.
What is a Council?
- A foundation’s council is the governing body of a foundation (equivalent to a corporation’s board of directors) and is responsible for the operations and activities of a foundation.
What is a Registered Office?
- A registered office is required by every foundation as it will hold updated copies of the financial and statutory records and will also be where any letters from governments or banks will be sent to.
What is the property of a foundation?
- A foundation can own different forms of property, including assets such as shares, investments, real estate, insurance policies and other assets.
How much does it cost to set up a Mauritius foundation?
- The engagement fee depends on the services you require from Tetra Consultants. Prior to each engagement, our team will fully understand your business needs and inform you of the exact services you require.
- Tetra Consultants’ fees include government fees such as the US$300 registration fee.
Are there any hidden fees throughout the engagement?
- Tetra Consultants believes in transparency between our firm and our international clients. All terms and conditions will be stated clearly within the appointment letter to ensure that there are no hidden fees.
- Our engagement fees consist of the government fees for company formation. However, it does not include third-party fees such as notarization, translation or legalization.