Taxation in Mauritius
Mauritius has a simple tax regime. All residents are taxed on their worldwide income on an accrual basis. A company is deemed resident if it is incorporated in Mauritius or if central management and control is located there. The latter provides for such companies that are incorporated outside Mauritius but with the strategic decisions being carried out in Mauritius or the board of directors meeting there. Non-resident companies are taxed on income that is sourced from Mauritius.
Foreign Tax Credits
Category 1 Global Business Companies (“GBC1”) companies are liable to taxes at the rate of 15% but provided that the GBC1 owns at least 5% of an underlying company, credit will be available on foreign tax paid on the income out of which the dividend was paid (‘underlying foreign tax credit’).
When a company not resident in Mauritius, which pays a dividend, has itself received a dividend from another company not resident in Mauritius (a ‘secondary dividend’) of which it owns either directly or indirectly at least 5% of the share capital, such dividend will be allowable as foreign tax credit and an underlying foreign tax credit will also be available.
Tax sparing credits are available – Under this regime the effective rate of taxation in Mauritius can be reduced, as a long stop provision exists whereby GBC1 companies may elect not to provide written evidence to the Commissioner of Income Tax showing the amount of foreign tax charged and enjoy a deemed taxation at 80% of the normal tax rate of 15%. Thus, the use of this long stop provision in isolation would reduce the effective rate of tax in Mauritius from 15% to 3%.
No withholding tax on remittance of branch profits.
No withholding tax on interest, royalties and dividends.
No capital gains tax.
Carry forward of losses limited to 5 years except for losses attributable to annual allowances.
Royalties, interest and service fees payable to foreign affiliates are allowable as expenses provided they are reasonable and correspond to actual expenses incurred.
No estate duty, inheritance or wealth taxes.
No stamp duties, registration duties and levy.
Zero rated Value Added Tax for global business transactions.
Trusts can elect to be non –resident and be tax-exempt in Mauritius.
Trusts can hold GBC1 licences and avail of DTA benefits.
The term "permanent establishment" means a fixed place of business through which the business of an enterprise resident in the treaty partners' jurisdiction is wholly or partly carried on in Mauritius and usually includes:
- a place of management;
- a branch;
- an office;
- a factory;
- a workshop;
- a warehouse, in relation to a person providing storage facilities for others;
- a mine, an oil or gas well, a quarry or any other place of extraction of natural resources;
- an installation or structure used for the exploration of natural resources;
- a building site or construction or assembly project, including supervisory activities connected therewith, of duration mentioned in tax treaties ( please refer to Highlight of Tax Treaties in Annex 4).
- a dependent agent