Mauritius is a sovereign state within the British Commonwealth. The head of state is the President of the Republic who is elected by the National Assembly. The Prime Minister is the leader of the winning party after elections for the National Assembly, which are held every 5 years, and is appointed by the President. The Council of Ministers is appointed by the President on the Prime Minister's recommendation. The leader of the opposition is also appointed by the President and is normally the leader of the main opposition party. There are 62 members of the National Assembly who represent the 21 constituencies; a further 8 members are nominated as best losers in an attempt to give fair representation to ethnic groups and minority parties.
Mauritius's legal system is a mixture of English Common Law and French Civil Law. Company and procedural law is based on English law. Substantive law is in the main modeled on the Napoleonic code. The Supreme Court of Mauritius is the highest court in the republic; final appeal is to the Privy Council in England.

Ever since gaining independence from Britain in 1968 the economy of Mauritius has grown steadily at around 5% annually. Growth slackened off in 2002 at about 2.2%, but rose again in 2003 to 4.1%, dipping to 3.1% in 2005. Sugar was and is a dominant crop, and still accounts for more than a third of export earnings. There are growing industrial, services, and tourist sectors. An export processing zone set up in 1970 has been successful, particularly in garment manufacture. The financial services industry has been a more recent Government-inspired initiative, but is now developing strongly. GDP per head has risen from $219 in 1968 to about $13,200 at purchasing power parity in 2005, putting Mauritius in the middle income range. Unemployment is running at about 10%, with inflation at 4%.
The Mauritian currency is the rupee (MR). Exchange controls were dismantled in stages between 1984 and 1994. Currently (2006) US$1 = about MR30. Investors are still required to demonstrate the source of funds to be repatriated, and must be up to date with local taxation.
The 2005 budget swept away most import duties with the aim of boosting the domestic economy.
Concluding an Article IV consultation with Mauritius in January, 2006, the IMF noted some economic problems due to adverse external trade circumstances, and recommended privatization of state enterprises plus broadening of the tax base.
The Mauritius government has said that it is expecting the economy to stage a strong recovery in 2006, anticipating growth of 5.1% this year.

In 1989 Mauritius set up its own stock exchange under the Stock Exchange Act 1988. The exchange is regulated by the Financial Services Commission. There is an Official List with about 40 listings and an Over The Counter Market with about 80 traded companies. As of April, 2005, there are 40 companies listed on the Official Market representing a market capitalisation of more than US$ 2.5 bn.
A new Securities Act passed in 2005 has yet to go into effect.
Electronic clearing and settlement was introduced in 1997, and a Centralised Depository System was implemented in 1998 which allows delivery versus payment (DVP) on a T+5 day rotating basis. The establishment of a clearinghouse, through the Bank of Mauritius, provides for a guarantee fund, which incorporates measures for securities and fund settlement failure. The Stock Exchange in collaboration with international advisers has also drafted new listing and reporting rules to ensure greater transparency for investors.
An Automated Trading System (SEMATS) was launched on 29th June 2001. It constitutes a state-of-the-art electronic trading system built on third generation technology. SEMATS put an end to traditional trading patterns which had typified the Stock Exchange of Mauritius since its inception. Trading in securities is conducted through dedicated trading workstations located at stockbroking firms and linked by communication lines to the SEM trading engine.
The Exchange was recently promoted from the status of 'corresponding exchange' to that of Affiliated Securities Market within the Fdration Internationale des Bourses de Valeurs (FIBV). Mauritius is also a member of the African Stock Exchanges Association (ASEA).
The market was opened to foreign investors after the lifting of exchange controls in 1994; foreigners are limited to individual holdings of not more than 15% in sugar companies, but are not otherwise limited unless they attempt to gain legal or management control of a Mauritian company (see Business Environment below). Settlement can be made in foreign currency; there is no capital gains tax and no withholding tax on dividends from companies on the Official List.
In September 2006, the SEM said it planned to launch an Alternative Development Market in early 2006.
CEO of the Mauritius Stock Exchange (SEM), Sunil Benimadhu said that the new market will allow the SEM to contribute to the process of empowerment of entrepreneurs and the government's goals for the 'democratisation' of the Mauritian economy.
The SEM joined the World Federation of Exchanges (WFE) in November, 2005. According to Mr Benimadhu, membership of the WFE will very much assist the Exchange in attracting foreign investors, and indeed the SEMTRI index gained 32 points in January, 2006, to close at a record high of 1,984 at the end of January. Capitalization of the exchange reached 81 bn rupees, representing 43.3% of GNP, with 22 million rupees arriving in the first two weeks of January alone.

Nationals of most OECD and a number of other countries do not need a visa and are given entry for 6 months on arrival; visas are issued to other nationals on application - they are free, but the process takes about one month. Mauritius does not recognise passports issued by the Taiwan government; holders of these passports must apply for an entry permit from the Passport and Immigration Officer. There is a special channel at the airport for business entrants who are involved in offshore activities.
Work permits are necessary for non-Mauritians to be employed; there is no maximum stay as such, but work permits are issued for a minimum period of 6 months and a maximum of 3 years. Permits are issued by the Prime Minister's Office in association with the Ministry of Human Resource Development and Reform Institutions.
In order to buy property, non-Mauritians require authority from the Prime Minister's Office.

Mauritius is well served by business and communications infrastructure and is a dynamic economy; the government actively encourages foreign investment and offshore activity through the Ministry of Industry & Commerce. The ministry operates a one stop shop for clearances and permits; it also provides assistance in identifying market outlets, joint venture partners, site locations, and buildings. However, dealings with Government tend to be somewhat bureaucratic - in this respect the French 'civil code' influence is noticeably to the fore rather than more free-wheeling Anglo-Saxon business attitudes.
There is a very clear distinction between the 'onshore' and 'offshore' sectors. Foreigners need specific permission from the Prime Minister's office before they can own shares in an onshore company, while Mauritians are barred from taking part in offshore activities.
2001 saw a comprehensive modernisation of the country's legal structure, partly just to catch up with competitors, partly to give expression to the decision to eschew 'offshore' status as such, and partly as a follow-up to the decision to sign a Commitment Letter to the OECD in order to avoid 'blacklisting'.
In this context the Mauritius Offshore Business Activities Authority (MOBAA), which had been a 'one-stop-shop' for the offshore sector, and had been the licensing and supervisory authority for offshore companies (except banks) since 1992 had clearly outlived its usefulness, as had the various pieces of legislation which explicitly recognised offshore companies and structures. All this was swept away, and new legislation came into effect in October.
To some extent, the changes were cosmetic rather than substantive, although there is no doubt that the new supervisory regime is a lot tougher than the old one. The Financial Services Development Act 2001 is a particularly complex piece of legislation, giving very extensive powers to the new Financial Services Commission which effectively replaced MOBAA as well as taking on some of the functions of the Central Bank. As the FSC gradually introduced its new supervisory regime in 2002 and 2003 there were complaints from the offshore sector that it was being heavy-handed. However, the total number of 'Global Business Companies', as the old Offshore and International companies are now known, had reached over 25,560 by May 2005, up more than 2,000 in the previous year.
There is a wide range of investment incentives for inward investment. Free Trade Zones and a Freeport were established in 1992 enabling up to 100% foreign owned enterprises. Money laundering is discouraged by the government, as is any trade in guns or drugs; however it is supposed that there is a substantial drug trade through the island.
The island republic has a good labour relations record and productivity has shown a 5% annual increase since 1994. Training and service quality are regarded as important; many Mauritian firms have adopted ISO 9000. Financial and professional services are well represented and a successful stock exchange was opened in 1989.