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Business Taxation in Mauritius
 
 
 

General

The taxation of resident Mauritian companies is governed by the Income Tax Act 1995, which is substantially based on UK tax law. However, there are many special taxation regimes applying to particular types of company:

• for companies operating offshore under the Financial Services Act 2007, supervised by the Financial Services Commission);
• for freeport companies, and for offshore trusts;
• for companies holding various types of certificate under the Industrial Expansion Act 1993;
• for companies that invest in 'incentive' companies.

A company is treated as resident in Mauritius if it is incorporated in Mauritius or if it is managed and controlled from Mauritius. A resident company is taxed on its worldwide income, which includes foreign-source income.

Taxable income includes rents, dividends, royalties and interest; however, dividends paid by 'tax incentive' companies, companies listed on the stock exchange, and companies which pay the full tax rate are exempt from tax in the hands of the receiving shareholder, whether resident or not. There is no capital gains tax, except on gains arising from the parcelling out of land. Other capital gains are not included in taxable income.

Income Tax Rate

The rate of corporate income tax in Mauritius is currently 15% on chargeable income, having been reduced from 25% as of 1st July, 2007.

A company is resident in Mauritius if it is incorporated there or its daily management activities are conducted from the jurisdiction. A local company is liable to pay corporation tax on its worldwide income. In 2007 the standard rate of corporation tax has been reduced from 25% to 15%. There is no formal withholding tax, but there are important nuances to be taken into consideration and addressed professionally when paying dividends or making other types of payments outside Mauritius. Certain types of companies are either fully or partially exempted from taxes.

Branches and resident subsidiary companies pay tax in Mauritius on the same basis; dividends (for the subsidiary) and net profits (for the branch) can both be remitted abroad without deduction of withholding tax. However, taxable profits are calculated somewhat differently: a subsidiary can deduct interest and royalties paid to its parent but cannot make an allowance for head office expenses, whereas a branch can deduct reasonable head office expenses but cannot deduct interest and royalties paid over.

Calculation of Taxable Base

Expenditure and losses are generally allowable in the year in which they are incurred to the extent that they are incurred in the production of gross taxable income. The following are some particular types of deduction that are permitted in addition:

• capital and investment allowances based on actual cost at varying rates depending on the type of asset;
• interest costs;
• exchange losses from trading;
• reasonable directors' remuneration;
• bad and irrecoverable debts;
• approved pension contributions;
• royalties;
• past trading losses;
• rent premiums;
• 200% of overseas marketing costs for tourist or export businesses;
• local taxes.

The following are some particular types of deduction that are not permitted:

• depreciation;
• exchange losses on capital assets (added to cost base);
• debenture interest, when the debentures are issued in proportion to shareholdings (treated as distributions);
• excessive fees paid to directors or their families (treated as distributions);
• corporate income and capital gains taxes; land transfer tax;
• provisions;
• entertainment expenses;
• carried back losses.

There is group relief only to the extent that an 'incentive' company can transfer losses to its parent; and there are some special arrangements in the sugar industry.


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