As we rapidly sail through 2024, and the pandemic appears to be behind us, many are now assessing the potential future economic risks and looking towards asset protection trusts. Subsequently, I’m receiving lots of emails regarding the use of foundations and How to Set Up a Foundation in Mauritius.

Read on and I’ll explain what you need to form an APT foundation and why Mauritius probably shouldn’t be your first choice.

Why Choose Mauritius for your Foundation?

You would be forgiven for needing to search for Mauritius in Google maps as it really isn’t a country that features highly on most people’s lists of places to visit. However, the small Sub-Saharan African island has become s relatively well-known offshore jurisdiction in the past five years.

The island nation is one of the few with relative political stability within the region and has enacted a body of “offshore friendly” laws to support the formation of asset protection vehicles and offshore companies. The country also sports one of the lowest rates of reported corruption in the region and this has seen a flood of major banks, such as HSBC, Barclays, and Standard Chartered open operations.

Additionally, Mauritius provides a very wide spectrum of financial services and, surprisingly, has managed to attract significant amounts of inward investment and capital through these offerings. 2012 saw the introduction of the Mauritius Foundation Act which saw a new era of asset protection services available from the island.

The financial services sector is fairly regulated by the government commission and there is transparency in banking operations. This has allowed the creation of entities that retain their privacy and tax effectiveness whilst also adhering to global Anti-Money Laundering and KYC rules.

Why Set Up a Foundation in Mauritius

A Mauritius foundation provides a range of privacy and asset protection features that an individual can avail themselves of. A private foundation provides excellent privacy protections due to the confidentiality and secrecy laws that are in place.

Privacy Benefits of a Mauritian Foundation

The Mauritian Registrar of Companies provides no publicly searchable database, and all ultimate beneficial ownership information is privately held and not disclosable. Additionally, you can also utilize nominee directors to ensure that there is a further additional layer of privacy in place.

Foundations in Mauritius are Tax Exempt

This is probably the primary question that I receive on a regular basis and, thankfully, it is an easy one to answer. Foundations set up in Mauritius are completely tax exempt as long as the founder and beneficiaries are non-residents. Additionally, there is no forced heirship or inheritance tax to speak of in any form.

However, it should be noted that foundations are required to keep an, up to date, set of accounts and records for inspection lodged at their local management company’s office.

How To Set Up a Foundation in Mauritius – Requirements

Thankfully, the setup process for a Mauritian foundation is simple and simply requires the founder to provide a range of documents. The main requirements for foundation creation are as follows:

• The name must include the word “Foundation” within it.
• You must have a registered office address located within Mauritius.
• The foundation will need to have a foundation council appointed and, at least, one member of the council must be a local resident within Mauritius.
• A local management company needs to be appointed and they will operate as your foundation secretary.

Additionally, you will need to go through the normal AML/KYC checks and provide notarized copies of your personal identity documents (Passport, etc.) and proof of address. The local agent will typically run checks through the world check database to ensure that you are not under any sanctions.

Similar in nature to a trust deed, the foundation charter will also need to be drafted as part of the formation process. This document codifies the responsibilities and duties of the foundation council members and lists the beneficiaries and overall aims of the foundation.

You can expect the formation time to take around 2-weeks and your local agent/formation agent should be able to provide you with either nominee council members or trusted professionals appropriate to the role.

Cost to Set Up a Foundation in Mauritius

There is a wide range of prices in the offshore service sector and much of it depends on the service level provided. However, on a general basis, the cost to set up a foundation in Mauritius is going to be around the US$1,200 (+ govt fees of $300usd) mark. It is generally comparable to the setup costs of Panamanian Private Interest Foundations.

Why You Should Consider Other Locations – The Negatives

The offshore world in 2022 is a very different place from a decade ago and the structures of old now are, significantly, more complicated. The biggest issue you will have with Mauritius is that of jurisdictional reputation.

Once you have your shiny new foundation charter in hand you will likely wish to commence banking relationships with a range of offshore banks that are not located on the island. Unfortunately, you will quickly discover that the major banks are loathe to open accounts for Mauritian entities.

The reality is that modern banking is all about risk mitigation and this means judging a new account applicant not only personally but also from the jurisdiction where they are incorporated in. This means it has become increasingly harder to find banking facilities for newly formed foundations and likely condemns you to bank locally.

The problem with banking locally is that many of the financial institutions do not provide the same level of service you would expect from major offshore centers. Additionally, there is always concern around financial stability and I would hate to have significant cash deposited in a local bank or major assets held in custody in Mauritius.

Subsequently, my advice is to look at alternative jurisdictions with a view to basing your foundation there unless there is a pressing business case for Mauritius.

Alternative Private Foundation Locations

If you are looking for the gold standard in Asset Protection, then you should really consider the Cook Island’s Asset Protection Trust as your first choice. It is the premier vehicle for privacy and protection globally and has been proven to work time and time again against significant legal challenges. However, it brings with it significant costs at around the US$10k mark for formation.

On the lower end of the scale, the Panama Private Interests Foundation can be established for around the same price as a Mauritius one but brings with it stronger legal protections and greater access to global banking options both locally and abroad. Expect to pay around the US1,200 mark for formation with nominee foundation council members.

How to Set Up a Foundation in Mauritius – Conclusions

Mauritius provides relatively cheap options for an asset protection vehicle that provides excellent legal protections. However, the low cost brings with it reputational issues with the island which may make it difficult to obtain banking facilities for your foundation globally.

Subsequently, my advice is to seek a structure elsewhere with the Cook Islands Asset Protection Trust Structure and Panama Private Interests Foundation top of my list.

Please feel free to reach out if you would like to chat about your specific needs and whether an APT vehicle would be right for your personal circumstances.