Decoding Corporate tax in Mauritius
In Mauritius, companies that are domiciled there are taxed on their global earnings, while those that are non-resident are only taxed on income that originates from Mauritius.
A business is identified as a resident of Mauritius if it fulfills one of the following criteria:
- It is established under Mauritian law. Its primary management and oversight is located in Mauritius.
- However, a company that is established in Mauritius but managed from outside the country is considered non-resident.
Mauritius employs a self-assessment taxation system for individuals. The tax is levied on the previous year's income. The fiscal year extends from July 1 to June 30.
Mauritius Corporate Tax
A standard 15% income tax is levied on businesses in Mauritius. However, certain conditions can qualify a company for a reduced 3% tax rate, such as:
- Income from the export of goods, including international transactions where the goods are shipped directly from the exporter to the importer without touching down in Mauritius.
- Manufacturing companies involved in the medical, biotechnology, or pharmaceutical industry that hold an Investment Certificate from the Economic Development Board.
- Income earned by a higher education institution established in Mauritius and registered under the Higher Education Act.
Under certain conditions, an 80% partial tax exemption is available on:
- Foreign-sourced dividends and interest.
- Profits from a foreign permanent establishment.
- Earnings from a Collective Investment Scheme (CIS), closed-end fund, CIS manager, CIS administrator, Investment Adviser, Investment Dealer, or Asset Manager licensed by the Financial Services Commission.
- Profits from leasing ships, aircraft, trains, or rail infrastructure.
- Earnings from reinsurance and reinsurance brokerage activities.
- Profits from leasing and providing international fiber capacity.
- Earnings from the sale, financing, asset management of aircraft and related spare parts and advisory services.
- Interest earned through a Peer-to-Peer Lending platform. Mauritius Tax Breaks
Tax Breaks in Mauritius
Some companies are eligible for an 8-year tax exemption from the year they start their operations, including:
- Companies established after July 1, 2017, that are involved in innovation-driven activities for intellectual property assets.
- Companies utilizing deep ocean water for air conditioning installations and services.
- Companies established after July 1, 2021, holding an Investment Certificate issued by the EDB.
- Companies holding a Global Headquarters Administration Licence, issued on or after September 1, 2016.
There are also tax holidays ranging from 5 to 10 years for specific activities and sectors.
Mauritius Corporate Social Responsibility (CSR)
Companies are required to contribute 2% of their taxable income from the previous year to a CSR Fund.
Mauritius Personal Income Tax
Taxable income for individuals is the net income after the Income Exemption Threshold (IET) and any other eligible reliefs have been deducted.
Residents are taxed on income derived from Mauritius, excluding exempt income. Non-residents are taxed only on income that is sourced from Mauritius.
The tax rate for individuals varies depending on their net income, ranging from 10% to 15%.
Residential Status for Individuals
An individual is considered a tax resident of Mauritius if he:
- Has a domicile in Mauritius unless he has a permanent abode outside Mauritius.
- Has spent at least 183 days in Mauritius.
- Has spent at least 270 days in Mauritius over the current income year and the two preceding income years.
Tax holidays are also available for individuals under certain conditions.
Mauritius Solidarity Levy
Residents who earn more than Rs 3 million annually are subject to a solidarity levy of 25% on the surplus income, but the levy should not exceed 10% of the total net income and dividends from resident companies.
The solidarity levy is intended to be a progressive tax measure designed to alleviate income inequality, by placing a larger tax burden on those who have the ability to pay more. It is structured in such a way as to limit the maximum burden on taxpayers and encourage wealth redistribution.
The levy is calculated by taking 25% of the surplus income (the amount that exceeds Rs 3 million), and comparing it to 10% of the total net income and dividends from resident companies. The lower of these two amounts is what the taxpayer is required to pay as the solidarity levy.
For example, if a resident has a total net income of Rs 5 million and receives dividends of Rs 1 million from resident companies, the levy would be calculated as follows:
- 25% of the surplus income: 25% of (Rs 5 million - Rs 3 million) = Rs 500,000
- 10% of total net income and dividends: 10% of (Rs 5 million + Rs 1 million) = Rs 600,000
In this case, since Rs 500,000 is lower than Rs 600,000, the resident would be required to pay Rs 500,000 as the solidarity levy.
The proceeds from the solidarity levy contribute to government revenues, which can be used to fund social programs and other initiatives aimed at supporting those in lower income brackets. The solidarity levy, thus, not only serves to increase government revenue, but it also advances the social objective of income redistribution.
Please note that tax laws are subject to change and interpretation, and while care has been taken to ensure the accuracy of this information, it should not be relied upon without consultation with a tax advisor or the appropriate government agency.
Mauritius has inked double taxation agreements with 45 countries, with more under negotiation. Here is a list of the countries where such agreements are currently in force.
|Country||Signing Date||Effective Date|
|Republic of Cabo Verde||13.04.2017||05.03.2018|
|Republic of Congo||20.12.2010||08.10.2014|
|Arab Republic of Egypt||19.12.2012||10.03.2014|
|Republic of Ghana||11.03.2017||22.01.2019|
|United Arab Emirates||08.09.1992||15.04.1995|
*Still in the ratification process and not yet in effect as of the last update. ** India renegotiated its double taxation agreement with Mauritius in 2016. The amendment came into force on April 1, 2017.
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