The Mauritius offshore financial services sector was built on three structural advantages: a network of 45 Double Taxation Avoidance Agreements currently in force, according to the Mauritius Revenue Authority as accessed August 2026, a low corporate tax rate of 15 per cent with an 80 per cent partial exemption on specified foreign-source income effectively reducing the rate to 3 per cent for qualifying Global Business Companies, and a regulatory and legal infrastructure designed to make Mauritius the most efficient routing jurisdiction between global capital and investment destinations in India and sub-Saharan Africa. At its peak, the sector administered assets held by Global Business Companies of USD 582 billion in 2019, according to the Financial Services Commission's Annual Statistical Bulletin published in December 2020, the most recent primary source figure available. More recent FSC data for 2024-2026 is not publicly disaggregated at sub-sector level in the retrieved primary datasets. The Financial Services Commission's 2023/24 Annual Report places the sector's contribution at 5.8 per cent of GDP, down from an estimated 8.4 per cent in 2022, though Statistics Mauritius national accounts do not isolate the global business sub-sector independently. The model worked because the three advantages worked simultaneously. The erosion of each advantage, on different timelines and through different mechanisms, is the story of the sector since 2016.

The India-Mauritius Double Taxation Avoidance Agreement had been in force since 1983 and had become the single most important source of the sector's routing value. It provided that capital gains arising in India from the sale of equity shares held by a Mauritius-resident entity were taxable only in Mauritius, where the effective rate was negligible. This made Mauritius the dominant conduit for equity investment into India: an estimated 25 to 36 per cent of foreign direct investment into India in peak years was routed through Mauritius. The treaty advantage was the fundamental reason for the sector's scale.

On 10 May 2016, India and Mauritius signed a Protocol amending the DTAA. From 1 April 2017, capital gains arising from the sale of shares acquired on or after that date became taxable in India at the applicable domestic rate. For shares acquired before 1 April 2017 and sold before 31 March 2019, a transitional arrangement provided a 50 per cent reduction in Indian capital gains tax. From 1 April 2019, the full Indian tax rate applied. The India routing advantage for equity investment was eliminated for all new investments. The treaty still provides residual benefits in other income categories and remains useful for debt investment structures, but the core capital gains routing advantage that drove the sector's scale in the 2000s and early 2010s was removed. New GBC structures for India-bound equity investment became structurally less attractive from April 2017 onwards.

In response to the OECD's Base Erosion and Profit Shifting framework, specifically Action 5 on harmful tax practices and Action 6 on treaty abuse, Mauritius undertook a comprehensive reform of its Global Business framework effective 1 January 2019. The reform abolished the two-tier GBC1 and GBC2 structure and replaced it with a single Global Business Company framework subject to mandatory economic substance requirements. Under the old structure, a GBC1 required minimal local economic activity to access treaty benefits. Under the new framework, a GBC must demonstrate genuine management and control from Mauritius, employ qualified personnel locally, maintain its principal bank account in Mauritius, and conduct core income-generating activities in the jurisdiction. The Financial Services Commission assesses substance compliance for every licensed entity.

The substance requirements reform increased the cost and operational complexity of maintaining a Mauritius GBC without a genuine economic presence on the island. For the category of entity that had previously used the old GBC1 as a low-cost routing vehicle with minimal local footprint, the reform either required a material increase in local operating costs or made the Mauritius structure unviable. The number of entities that chose the latter option is visible in the FSC's own licensing statistics, which show a contraction in GBC licences in the period following the 2019 reform relative to the pre-reform peak.

In February 2020, the Financial Action Task Force placed Mauritius on its list of jurisdictions under increased monitoring, commonly known as the grey list, citing strategic deficiencies in the anti-money laundering and counter-terrorist financing framework. It should be noted that separately, on 10 October 2019, the Council of the European Union had already removed Mauritius from its list of non-cooperative jurisdictions for tax purposes, confirming tax compliance. The AML/CFT grey listing therefore followed a tax-related clearance. The European Commission listed Mauritius as a high-risk third country for AML/CFT purposes effective October 2020. For the offshore sector, the consequence was immediate and structural: European institutional investors, whose internal compliance frameworks require enhanced due diligence for transactions involving grey-listed or EU-blacklisted jurisdictions, became constrained in their use of Mauritius-domiciled structures. Certain fund managers and asset allocators suspended new investments into Mauritius-domiciled vehicles for the duration of the listing.

Mauritius was removed from the FATF grey list at the October 2021 plenary, following its completion of the FATF action plan. The FATF placed Mauritius under Enhanced Follow-up status, as recorded in the most recent formal FATF country report published in January 2023, which requires continued reporting to the FATF on progress made in strengthening the AML/CFT framework. The European Commission confirmed the removal of Mauritius from its high-risk list through a Delegated Regulation adopted on 7 January 2022 and published in the Official Journal of the European Union on 21 February 2022. The grey listing and EU blacklisting therefore lasted approximately eighteen months in operational terms. As of the FATF's June 2026 plenary, Mauritius is not listed on the grey list. The reputational damage of the 2020-2022 period, however, accelerated the reassessment by European institutional investors of their exposure to Mauritius-domiciled structures at precisely the moment when the India treaty revision was already reducing the routing incentive for Asia-bound investment.

The OECD's Pillar Two framework establishes a global minimum effective corporate tax rate of 15 per cent for multinational enterprises with consolidated annual revenues exceeding EUR 750 million. Mauritius incorporated the framework through the Qualified Domestic Minimum Top-up Tax, enacted through sub-part AF of Part IV of the Income Tax Act, applicable for fiscal years ending on or after 1 January 2025. The QDMTT ensures that large multinationals operating through Mauritius-domiciled structures pay at least 15 per cent effective top-up tax in Mauritius, eliminating the benefit of the partial exemption mechanism that had reduced the effective rate to approximately 3 per cent for qualifying GBCs. For the specific category of large multinational that had used Mauritius as a low-tax routing jurisdiction for substantial income flows, the Pillar Two minimum removes the primary tax efficiency rationale for the Mauritius structure.

The QDMTT applies only to entities within multinational groups with revenues above EUR 750 million. It does not affect smaller GBCs or fund structures below the threshold. But the category of entity above the threshold, the large multinational routing significant income through a Mauritius vehicle, was the category that generated the greatest contribution to the sector's GDP and tax revenue. The minimum tax does not abolish the offshore sector. It removes the highest-value client category's primary incentive for using it.

The sector has not collapsed. The FSC continues to issue and monitor Global Business licences. The treaty network, while reduced in its value for certain specific transaction types, remains functional for debt investment structures, fund domiciliation, holding company arrangements, and certain categories of Africa-focused investment where the Mauritius regulatory infrastructure and geographic positioning retain genuine utility. The sector's recovery from the FATF and EU listing was real: the AML/CFT framework is now materially stronger than it was in 2020, and the reputational rehabilitation with European institutional investors is underway.

What the data shows is a sector in structural contraction. The decline from 8.4 per cent of GDP in 2022 to 5.8 per cent in 2023/24 reflects the accumulated effect of the four structural blows described above. It does not reflect a single event or a cyclical downturn. It reflects the progressive narrowing of the conditions under which the sector's original competitive model was viable. The India treaty advantage has been gone since 2017. The brass-plate entity is gone since 2019. The FATF risk premium on Mauritius-domiciled vehicles persists in some institutional frameworks even after the formal delisting. The minimum tax eliminates the primary rate advantage for large multinationals from 2024. The sector is adapting. But adaptation means doing less of what it was built to do and more of what the reformed regulatory environment permits. The GDP contribution data records the cost of that transition.