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Corporate Tax Guide: Mauritius
Mauritius

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The information is valid for the entire country except where indicated. For example, in the case of Malaysia, Labuan is part of Malaysia but has a special tax regime, so this is noted.
Mauritius – entire country.
The corporate tax rate shown is the typical corporate tax rate that a domestic corporation owned by non-resident persons would pay. The tax rate does not include withholding tax on dividends, but does include a distribution tax shown separately if applicable. Certain countries have a low corporate tax rate, but charge an additional tax when a dividend is distributed. Because this tax is paid by the corporation, and not deducted from the amount of the dividend itself, it is not a dividend withholding tax. As a result, it typically cannot be reduced by an international tax treaty.
15% for domestic companies, but companies holding a Category 1 Global Business (GBC1) Licence have a maximum effective tax rate of 3%.

Domestic companies are liable to contribute 2% of chargeable income under the CSR program.
The basis of taxation for a corporation will typically be one of:
  • World income (i.e. income from all sources)
  • Territorial (i.e. only income from within the jurisdiction)
  • Territorial and remittance (income earned within the jurisdiction and income remitted into the jurisdiction)
Other basis of taxation are possible, and, if applicable, they are noted.
Worldwide income.
Where non-resident corporation carries on business in a country, business profits may be subject to corporate tax. In addition, a branch profits tax may apply in lieu of dividend withholding tax. This branch profits tax applies to the after tax profits, typically at a fixed percentage. An international tax treaty may reduce the rate of branch profits tax, typically to the rate provided for dividend withholding.
Tax rates on branch income are the same as on corporate profits (i.e., 15%). No tax is withheld on the remittance of profits by way of dividend to a parent company. A branch, other than one holding a (GBC1) Licence, is liable to contribute an additional 2% by way of CSR in the same manner as required for companies.
The common forms of business entity are noted. In addition, the entities which are flow through entities for U.S. tax purposes are indicated.
Corporation, Partnership, Limited Partnership, Trust, Société, Public Company, Private Company, Global Business Company.
Capital gains may be fully taxed, partially taxed or not at all. In certain countries, an exemption, called the participation exemption, will apply to exempt from tax a capital gain from disposition of a substantial holding of shares of a subsidiary. Where a participation exemption is applicable, it is noted together with a summary of the main conditions.
No tax is imposed on capital gains in Mauritius; however, acquisitions and disposals of immovable property in Mauritius are subject to a registration duty and land transfer tax in Mauritius.
Certain countries allow group taxation, otherwise known as consolidated tax filing. Here the tax returns of a group of corporations in the country may be combined together, which can be useful. If group taxation is permitted, it is noted along with the main conditions.
There are no group taxation provisions in the Mauritius tax legislation.
Countries offer various kinds of special exemptions and incentives. Examples are a reduced tax rate, a tax holiday, a tax credit on the purchase of equipment, special accelerated deductions for deprecation, incentives for R&D, and various others. Here the major items are noted.
  • A GBC1 pays a net effective tax rate of 3% only.
  • A GBC2 is exempt from all forms of taxation.
  • A “Freeport company” is fully exempt from taxation.
  • There is no capital gains tax.
  • There is no withholding tax on dividends, interest and royalties for GBC1 companies to non-resident shareholders.
  • There is no inheritance tax, estate duty or gift taxes.
  • No exchange controls; dividends and capital can be freely repatriated.
  • Underlying tax credit available.
  • Tax sparing provision: 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 showing the amount of foreign tax charged and enjoy deemed taxation at 80% of the normal rate of 15% (i.e., 12%). Thus, use of this long stop provision in isolation would reduce the effective rate of taxation in Mauritius from 15% to 3%.
Many countries have thin capitalization rules which limit or deny the deduction of interest expense in certain circumstances. For example, if debt exceeds three times equity, a proportionate amount of interest expense may not be deductible. Limitations take various forms, restricting the interest expense deduction to a percentage of profit, deeming the debt to be equity and the interest to be a payment of dividends, and various other rules which may blend of these principles. Where a country has thin capitalization rules, they are briefly described.
There is no thin capitalization legislation in force in Mauritius; there is a requirement for transactions to be on an arm’s length basis. There are other anti-avoidance provisions whereby interest expenses can be treated as dividends.
Many countries have transfer pricing rules. They very often follow the OECD guidelines and the arms length principle. Some countries have specific rules which apply in certain cases. In addition, some countries allow for a selection of the most appropriate transfer pricing methodology in the circumstances, while other countries follow a hierarchy of methods, with the CUP method (comparable uncontrolled price) often ranking first. The transfer pricing rules are briefly explained.
There are no formal transfer pricing rules in Mauritius, but The Mauritius Revenue Authority follows the general definition of arm’s length principle given by the OECD.
Many countries tax passive income earned in controlled foreign corporations (CFC’s) on an imputation basis while active income is not taxed. Such CFC rules are usually complex and vary significantly in what is considered passive income, and how foreign tax paid is taken into account. Some countries approach CFC rules on the basis of whether or not the foreign corporation is resident in a low tax jurisdiction or a tax haven. This may be done through a black list of countries.
The general overview of CFC rules is described in simple terms.
Mauritius does not have any CFC rules or regulations.
Profits repatriated by way of dividends from a subsidiary to a parent company are typically taxed in one of three ways:
  • The dividends are exempt of tax.
  • The dividends are deductible from taxable income, but not fully (90%, for example, of the dividend is deductible).
  • The dividend is taxable, grossed up to the pre-tax amount, and a foreign tax credit claimed for foreign taxes paid.
The applicable method is noted.
There is no exchange control; there is free repatriation of profits and capital.
Most countries allow a foreign tax credit based on a formula, typically net foreign income over the net income times taxes payable. This limits the foreign tax credit to roughly the domestic tax otherwise applicable to the foreign income. There are numerous variations and technical rules in the details of foreign tax credit calculations. Where a foreign tax credit is allowed, the general principles are described.
Foreign Tax Credit (FTC) is available. Foreign tax credits are generally available for withholding tax, underlying tax and tax sparing provision.

If there is written evidence of foreign tax paid, a GBC1 can claim the higher of the deemed tax credit of 80% or the foreign tax credit against Mauritian tax for actual:
  • withholding taxes suffered abroad on income remitted to Mauritius;
  • foreign corporation tax charged on income out of which dividend is paid (i.e., the underlying tax credit) if the taxpayer holds not less than 5% of the share capital of the company paying the dividend.
In the absence of evidence, the amount of foreign tax shall nevertheless be conclusively presumed to be 80% of the Mauritian tax chargeable with respect to that income.
14. Losses
Losses typically can be carried forwards for a period of years, and sometimes can be carried back. Losses may be segregated into capital losses and non capital losses.
Losses can be offset against future corporate income in the following five income years. Losses attributable to capital allowances can be carried forward indefinitely. Losses may not be carried back.

Where a company takes over another company engaged in manufacturing activities, or two or more companies engaged in manufacturing activities merge into one company, any unrelieved loss of the acquiree may be transferred to the acquirer in the income year in which the takeover takes place, on such conditions relating to safeguard of employment as may be approved by the Minister of Finance.
It is not practical to list all of the tax treaties which a country has in a simple guide like this. Accordingly, a link is provided in each case to the tax treaties.
Some countries have entered into Tax Information Exchange Agreements (TIEA).
Treaties are more and more containing provisions that limit benefits (LOB provisions).
  • Income Tax: 43
  • TIEA: 9
  • LOB provisions: Very few have LOB or principal purpose test, most do not.
Withholding tax rates vary considerably from treaty to treaty, and countries may have domestic exemptions applicable in certain circumstances (for example copyright royalties, interest paid to arm’s length persons, etc.). A table shows the typical rates but cannot adequately summarize all of the details. The applicable treaty should be consulted.
TREATYNON-TREATY
Non bank interest0%15%
Royalties10%15%
Rent5%5%
Contract0.75%0.75%
Services3%10%
Payments made by central government or local authority for procurement of goods/services1% - 3%10%
There are no withholding taxes on local dividends and bank interest.
Some countries allow for the selection of year-end while other countries specify a particular year-end which all business entities must have. Normally the taxation year cannot exceed 12 months. Where it can exceed 12 months, this is noted.
The fiscal year runs from 1 July to 30 June; however, companies may choose a financial year-end other than 30 June for tax purposes.
This is the due date for filing a tax return. Where extensions are available, this is noted.
Due six months after year-end.
No extensions.
The typical tax instalment requirements are noted.
Yes, companies having gross income exceeding 10 million Mauritian rupees (MUR), or that have taxable income, are required to submit an APS statement and pay any tax for the quarter immediately following the end of the accounting year.
This is the date when the corporate tax owing for the year must be paid. It may be different from the tax return filing due date.
Any tax payable in accordance with the annual return must be paid at the time of filing the return.
This is the period after which the tax department cannot in normal circumstances reassess a taxation year. It is sometimes referenced to the end of the taxation year and sometimes to the date of the first assessment of that taxation year.
Statutory time limit to make an assessment is three years preceding the current tax year.
If a country has exchange controls, this is noted, together with the main requirements.
No.
23. VAT
A VAT tax system typically provides that the supply of goods and services is classified as taxable, tax exempt, or zero rated. Where a business is engaged in an activity which is taxable, it must charge VAT on its revenue, and can claim a refund of VAT on its expenditures. Where the activity is exempt, it does not charge VAT on its revenue, and cannot claim back VAT paid. Where the entity is engaged in activities which are zero rated (typically agriculture, food services and exports), then it can claim back VAT which it has paid on its expenditures, and does not charge VAT on its revenue.
If a country has a typical VAT system, this is noted. If a country has no VAT system but a sales tax system, this is indicated. Some countries may have a mixture, and taxes may apply at different levels (federal and state for example).
The standard rate of VAT is 15%, but some supplies are zero-rated and others are exempt.
Stamp duty, or land transfer tax, can apply on such things as the transfer of shares, land, or the issuance of bonds or debentures. This is described together with the applicable rates.
Stamp duty varies from MUR 25 to MUR 1,000.
Land transfer tax is levied on the transfer of land (excluding the value of any building thereon) and is payable by the trans¬feror at the rate of 5%.
If capital tax is payable, this is described. Capital tax may apply in specialized industries, such as banking and insurance, even if a country does not generally apply a capital tax to corporations.
None.
Where significant, other taxes are noted.
Payroll taxes, individual income tax, taxes on property, taxes on goods and services and other taxes.
Anti-Avoidance Rules take many forms, the most common ones are a general anti-avoidance rule, treaty shopping limitations, the requirement for economic substance (or a business purpose in carrying out transaction) and specific anti-avoidance rules for particular purposes. A very brief overview of the anti-avoidance rules is described.
  • GAAR Provisions.
  • Interest on debentures issued to shareholders by reference to shares.
  • Excessive management expenses.
  • Numerous specific anti-avoidance rules and limitations.
Where a non-resident person holds shares of a corporation established in the country listed, the capital gain which results may be taxable or not taxable depending on the circumstances and, possibly, the existences of an international tax treaty. The general rules are noted.
Sale of shares: Mauritius has no capital gains tax on disposal of shares.
Sale of assets: Mauritius has no capital gains tax on disposal of assets.
Where a corporation is acquired through the purchase of shares, sometimes a step up is allowed so that the cost of its assets can be revalued. The main rules are briefly summarized.
Step up of value in case of share deals is not allowed.
In some countries, rulings are commonly used (and sometimes even required). In other countries the system is either unavailable or not commonly used except in special circumstances.
Rulings can be obtained from the Tax Authority. These are binding.
31. Other
Other important aspects of the tax system are noted.
FATCA: Mauritius and the government of the United States of America signed an Agreement for the Exchange of Information Relating to Taxes (the Agreement) to set the legal framework to enable exchange of tax information between the two countries.

CRS: Mauritius signed the Organisation for Economic Co-operation and Development (OECD) Convention on Mutual Administrative Assistance in Tax Matters. The effective date is 1 January 2017 and the first reporting will now start from 31 July 2018.