THE LIMITED LIABILITY PARTNERSHIPS ACT 2016
Mauritius introduced a Limited Liability Partnerships Act in 2017 (“LLP Act”) offering a new type of partnership vehicle. The Limited Liability Partnership (“LLP”) is a hybrid form of vehicle combining features of both a company and a limited partnership. The LLP is being increasingly used worldwide as a business vehicle and for investments purposes. The LLP Act currently provides that an LLP can be used for offering professional or consultancy services and also legal services through the holding of a Global Legal Advisory Services Licence issued by the Financial Services Commission (“FSC”).
Other activities that an LLP can engage in may be prescribed at a later stage. The advantages of using an LLP are that it provides the limited liability protection to its partners that the company structure provides, while allowing them to also take part in the management of the business.
1. Salient features
An LLP can be set up by two or more partners. The LLP Act also provides for the conversion of an existing entity or unincorporated body to an LLP and the re-domiciliation of foreign LLPs or Mauritian LLPs to and from Mauritius.
There are no restrictions on the residency of the partners and a partner can be an individual, an entity or an unincorporated body.
The LLP is required to appoint a Manager resident in Mauritius at all times which should be a local management company if the LLP holds a Category 1 Global Business Licence or a person qualified as a secretary if such is not the case.
The LLP should be registered with the Registrar of LLP. A partnership agreement should be put in place by the partners which will provide for the governance of the LLP and the rights and duties of the partners. The LLP can hold a Category 1 Global Business Licence if it would conduct a major part of its business outside Mauritius. In such case, the LLP Act provides for public records of the LLP not to be available for inspection, and its audited financial statements to be filed with the FSC.
2. Tax treatment
The LLP is a fully tax transparent vehicle. An LLP is not liable to income tax in Mauritius. Its partners resident in Mauritius are liable to income tax on their share of income from the LLP. For this purpose, the net income of a partner is deemed to be the share to which he would have been entitled in the income of the LLP during an income year if the income had been wholly distributed among the partners. However, an LLP holding a Category 1 Global Business Licence can elect to the Mauritius Revenue Authority (“MRA”) to be taxed similarly to a corporation. If elected to be taxed as a corporation, it can avail of the provisions of double tax avoidance agreements entered into by Mauritius with other treaty partners.
An LLP holding a Global Legal Advisory Services Licence will benefit from a 5-year tax holiday in Mauritius.
This highlight is for information only. While every care has been taken to make it as comprehensible as possible, it may have omitted information that is useful to a particular reader. You are urged to seek professional advice as may be required and not rely on this highlight as advice or opinion.