Mauritius: Strategic Hub for India-Focused Feeder Funds
Mauritius has long been a preferred international financial centre for structuring feeder funds, particularly for global investors looking to access India-dedicated Alternative Investment Funds (AIFs). Its well-established track record in cross-border investments, particularly into India and Africa, makes it an ideal jurisdiction for setting up robust, compliant, and tax-efficient investment platforms.
Jurisdictional Strengths and Tax Efficiency
Mauritius enjoys an extensive network of 46 Double Taxation Avoidance Agreements (DTAAs) and 45 Investment Promotion and Protection Agreements (IPPAs), ensuring certainty of tax treatment and protection for cross-border investors.
Unlike many jurisdictions, Mauritius does not impose capital gains tax, withholding tax on dividends or interest, and maintains no exchange controls—making it exceptionally conducive to the free flow and repatriation of capital.
Tax Benefits for Mauritius-Based Funds:
- Corporate tax rate of 15% for licensed funds
- 80% partial exemption on most foreign-sourced income
- 95% partial exemption on interest income
- Effective tax rate of 3% or less (with substance and CIGA requirements met)
- Complete tax exemption under Special Purpose Fund (SPF) regime
A Climate Change Responsibility (CCR) Levy was introduced last year, impacting the headline rate by 2%. However, the effective tax rate after partial exemption of interest income remains minimal, preserving Mauritius’s competitive advantage.
The Mauritius Variable Capital Company (VCC)
Established under the Variable Capital Companies Act 2022, the Mauritius VCC is a modern and highly flexible fund structure. It allows for the formation of multiple sub-funds and SPVs under a single legal umbrella, which can elect to have separate legal personalities.
Each sub-fund or SPV can operate as a Collective Investment Scheme (CIS) or a Closed-End Fund (CEF), with share classes and dividends tailored accordingly.
Key VCC Benefits:
- Sub-funds/SPVs benefit from Mauritius’ DTAAs
- Partial exemptions apply to qualifying income
- Option to file single or separate tax returns
- Tax losses from one entity can offset gains in another when consolidated
Regulatory Requirements and Compliance
CIS vehicles in Mauritius are regulated under the Securities Act 2005 and the CIS Regulations 2008. Funds qualifying as Expert Funds—targeting sophisticated or institutional investors—enjoy lighter regulatory burdens.
Mandatory appointments for CIS vehicles include:
- Compliance Officer (CO)
- Money Laundering Reporting Officer (MLRO)
- Deputy MLRO (DMLRO)
GWMS Ltd, as a licensed Fund Administrator, provides comprehensive onboarding and operational support, including liaison with the Financial Services Commission (FSC) for licensing and structuring.
ISIN Allocation and Global Custody Access
Global private banking platforms, particularly in Switzerland and other major financial centres, require International Securities Identification Numbers (ISINs) for fund units or securities. An ISIN enhances fund legitimacy and accessibility by enabling custody across major banking platforms.
The Mauritius FSC serves as the official National Numbering Agency (NNA), having assumed this role from the Central Depository & Settlement Co. Ltd (CDS) in December 2021. CDS continues to issue ISINs operationally under ISO 6166 standards.
Additional codes allocated by CDS include:
- CFI Codes (ISO 10962)
- FISNs (ISO 18774)
These codes are essential for listing, trading, and custody purposes. GWMS Ltd supports fund managers throughout the ISIN application and registration process to ensure smooth integration with international platforms.
The Credentials of the Mauritius International Financial Centre
Several relatively recent jurisdictions offer primarily tax incentives as their main attraction. However, these “new” jurisdictions often feature evolving regulatory regimes, trial-and-error approaches, potential retroactive tax law applications, and limited international investor familiarity.
Mauritius, by contrast, offers:
- A 30+ year track record of cross-border capital structuring
- Consistent legal and tax interpretation
- A recognised and compliant AML/CFT regime (100% compliance with FATF’s 24 recommendations)
- Established trust with international custodians, investors, and fund promoters
- Deep knowledge of the Indian capital market
The mature financial ecosystem includes experienced lawyers, accountants, and fund administrators with specific expertise in Indian inbound investment structures.
India-Mauritius Investment Corridor
Mauritius has historically played a central role in FDI flows into India. Between April 2000 and March 2024, Mauritius accounted for over US$180 billion in cumulative FDI—approximately 25% of India’s total inflows.
With the CECPA trade agreement in place and the revised India-Mauritius tax treaty ensuring fair but favourable treatment, Mauritius continues to offer an optimal jurisdiction for feeder funds targeting India.
India’s private capital markets are also rapidly evolving. AUM for India-focused private debt alone reached US$17–20 billion by end-2023. Mauritius caters well to this trend:
- A 7.5% withholding tax rate on interest from India (among the most competitive globally)
- 95% exemption on interest income for CIS/CEF funds (from July 2024)
- Expanded investment scope to include loans and debt instruments
- CCR levy does not erode competitiveness due to Mauritius’ effective tax planning options
Strategic Considerations for Feeder Funds
Post-BEPS and MLI, fund promoters increasingly evaluate regulatory stability, AML compliance, operational costs, and global custody access alongside tax considerations. Mauritius scores strongly across all dimensions:
- Regulatory certainty with virtually no retrospective changes
- Lower overall operating costs compared to Singapore, UAE, or EU jurisdictions
- Deep local ecosystem and service provider experience
- High familiarity with India investment structures and flows
- No reputational risk from AML/CFT non-compliance
When choosing a base jurisdiction, factors such as investor base geography, ease of bank account opening, ISIN availability, and confidence in fund administration often outweigh headline or effective tax rates.
Conclusion
Mauritius remains a time-tested, substance-driven, and globally accepted jurisdiction for setting up feeder funds targeting Indian AIFs and similar structures. It offers unmatched flexibility through fund solutions including SPFs, VCCs, and Expert Funds, along with internationally compliant infrastructure, treaty benefits, and comprehensive regulatory support.
To explore how Mauritius can serve as your preferred fund platform, or to assess how a CIS/SPF/VCC/ISIN-enabled fund structure might suit your strategy, contact our experienced team at GWMS Ltd today.
