Issue 001 · The Structure · Mauritius, United Arab Emirates
A Mauritius holding company over a UAE free zone business
One of the most common set-ups for founders who operate from the UAE and invest across Africa and Asia. It works only with the governance to hold it up.
Why each piece sits where it does
Holding company
The Global Business Company sits at the top, and it has to earn the position. It must carry out its core income-generating activities in or from Mauritius, be managed and controlled from Mauritius and be administered by a licensed management company. Among other things, the FSC looks at whether it has at least two resident directors and its principal bank account in Mauritius (Financial Services Act, section 71(3)).
Operating company
The operating company sits below, where the customers, staff and licence are. If it is a Qualifying Free Zone Person and meets the conditions, its qualifying income is taxed at 0%; other taxable income is taxed at 9%.
Dividends to the holding
Dividends route up from the operating company to the holding company with no UAE withholding, because the UAE applies withholding tax at 0%. In Mauritius, foreign dividends can qualify for an 80% partial exemption, subject to substance conditions.
Management company and bank
The administrator and the Mauritius bank account sit beside the holding company as part of the substance test, not as extras. A counterparty or a bank will ask about them first.
Where this goes wrongDecisions taken in Dubai. The founders live in Dubai and settle the holding company's real decisions there. The company now fails the Mauritius management and control test, and it can be treated as tax resident in the UAE instead, as a foreign company effectively managed and controlled there. Hold board meetings in Mauritius, with the resident directors taking part in the decisions.
Our readingWorth it for founders who will hold investments outside the UAE and want a holding company with real governance. For a single UAE business with no plans beyond it, the structure does not earn its cost.
This piece appeared in Jurisdicta, Issue 001. General information only; not legal, tax or investment advice.