A Limited Partnership (LP) is a business structure where two or more individuals collaborate in a venture, each assuming distinct roles. General partners are responsible for managing the business and bear unlimited liability, while limited partners contribute capital and enjoy liability limited to their investment. Mauritius has established itself as a preferred jurisdiction for forming LPs, thanks to its strategic location, robust financial ecosystem, and business-friendly environment. As an internationally respected financial centre, Mauritius provides a secure and efficient platform for global investors and enterprises.

Legal and Regulatory Framework

Limited Partnerships in Mauritius operate under a clear and comprehensive legal framework that promotes transparency, investor protection, and regulatory compliance. The Financial Services Commission (FSC) regulates and supervises LPs holding a Global Business Licence (GBL), ensuring alignment with international best practices. The key legislations governing LPs include the Limited Partnerships Act and the Financial Services Act, both of which lay the legal groundwork for establishing and managing LPs in the country.

Versatile Applications of Limited Partnerships

Limited Partnerships in Mauritius serve a broad range of purposes across various sectors. They are particularly popular for:

• Investment Funds: LPs offer a flexible and tax-efficient structure ideal for pooling and managing investment capital.
• Real Estate and Private Equity: LPs enable efficient capital raising, asset management, and profit distribution, making them ideal for real estate developments and private equity ventures.
• Estate Planning and Wealth Management: LPs are also used for structuring succession plans and protecting family wealth, providing strategic tools for asset preservation and intergenerational planning.

Tax Advantages of Limited Partnerships in Mauritius

Mauritius offers two structuring options for Limited Partnerships (LPs): with legal personality and without legal personality. Each option comes with specific tax benefits tailored to meet different business objectives and partner profiles.

Limited Partnership With Legal Personality

When an LP is incorporated with legal personality, it is treated as a separate taxable entity under Mauritian law. This structure provides several strategic tax planning opportunities:

• Separate Tax Entity: The LP is taxed independently from its partners, which can be beneficial for businesses aiming to separate personal and business finances.
• Access to Double Taxation Agreements (DTAAs): As a distinct legal entity, the LP may qualify for Mauritius’s extensive DTAA network, potentially reducing withholding taxes on international income.
• Corporate Tax Efficiency: The LP may be subject to Mauritius’s corporate tax rate of 15%, which can be reduced to an effective 3% through an 80% exemption on specified types of foreign income, particularly when the partnership holds a Global Business Licence (GBL).
• Tax Credits: The entity may be eligible for foreign tax credits, helping reduce overall tax liabilities.
• Tax Deferral Opportunities: Retaining profits within the partnership (instead of immediate distribution) can enable partners to defer tax obligations and support reinvestment strategies.

Limited Partnership Without Legal Personality

An LP without legal personality is not treated as a separate taxpayer. Instead, it benefits from pass-through taxation, where the tax obligation is transferred directly to the partners:

• Flow-Through Taxation: Profits and losses are passed on to the partners and taxed at their individual tax rates, avoiding entity-level taxation.
• Elimination of Double Taxation: Since the partnership itself isn’t taxed, partners are not subject to duplicate taxation on the same income.
• Greater Flexibility in Tax Planning: Partners can leverage their personal tax attributes—such as deductions, credits, and loss carryforwards—for more tailored tax outcomes.
• Potential for Tax Deferral: Depending on how and when distributions are made, partners may delay recognising income, offering additional planning flexibility.

Making the Right Choice

The decision between forming a limited partnership with or without legal personality should be guided by the partners’ tax strategy, residency status, and the intended use of the partnership.

• LP with legal personality: Ideal for accessing tax treaties, corporate tax advantages, and structured international planning.
• LP without legal personality: Best suited for partners looking for simplicity, direct taxation, and greater flexibility in personal tax planning.

For optimal results, it is advisable to consult with a tax or corporate advisor to ensure that the chosen structure aligns with both local requirements and international tax strategies.