Taxes in Mauritius
When settling abroad, all questions must be dealt with in advance and be answered clearly and comprehensively. But some questions are more difficult to answer than others! This is the case of personal and corporate taxation, a subject that can be intimidating albeit essential. Income tax, tax year, corporate tax, VAT, taxation of offshore companies, tax benefits, etc. This chapter has been designed to guide you through taxation in Mauritius.
Mauritius offers a transparent tax system
Mauritius has put in place many tax advantages to encourage foreign investments while respecting international standards. The signing of international agreements in respect of these standards has allowed the OECD (Organization for Economic Cooperation and Development) to rank Mauritius among the most virtuous countries in terms of taxation.
Becoming a tax resident in Mauritius
The Mauritius Revenue Authority (MRA) considers a tax resident in Mauritius to be a foreign person who stayed:
At least 183 days during the fiscal year on the island;
Or
At least 270 days if one combines the time spent during the current fiscal year and the 2 previous fiscal years.
With that, they become taxable on the income generated in Mauritius but also on the foreign income transferred to Mauritius.
By income, the tax authorities mean:
- Income from professional activity;
- Pensions;
- Income from a trade or profession;
- Rents;
- Interest;
- Royalties.
Capital gains are the exception to the rule, not being subject to any taxation.
To date, Mauritius has signed 45 tax treaties. An additional series of treaties is also under negotiation.
Useful link:
Countries with which Mauritius has signed a tax treaty
Tax year in Mauritius
The tax year begins on July 1 and ends on June 30 of the following year. Tax returns must be submitted to the MRA by September 30 in person or October 15 electronically.
Individual income tax in Mauritius
The Mauritian tax system is relatively simple to understand.
In Mauritius, not only tax contributions but also social contributions (pensions and retirement) are deducted at source by the employer. The system is called PAYE - Pay As You Earn and all administrative procedures are taken care of by the company.
As far as income tax is concerned, all employees have a Tax Account Number (TAN) and benefit from the deduction at source. This means that the employer extracts the appropriate amount directly from each employee's salary each month.
However, at the end of the tax year, the employer gives each employee an "Employee Declaration Form" (EDF) on which the non-salary income (interest, royalties, dividends from abroad) is listed. The employee must use this form to calculate the taxable amount. If the total of the deductions made at source is less than what the employee is required to pay, the employee must pay the difference to the MRA. If the MRA has overpaid, the employee is refunded the difference.
To find out, the employee returns his or her declaration to the tax office, the Mauritius Revenue Authority (MRA). This can be done by going in person to the MRA with the EDF issued by the employer.
Alternatively, the employee can do this online by registering on the MRA's e-Service website with his Tax Account Number (TAN).
Individual tax rates
While the standard individual tax rate is 15%, it is reduced to 10% for annual net income up to Rs 650,000.
Taxable income in excess of Rs 3 million is subject to a solidarity levy of 25%.
Tax allowances on individual taxes
Income is subject to an allowance of Rs 325,000 (in 2021-2022) for a single person (and more if there are dependents).
Income up to the allowance threshold is tax-exempt. The tax rate is 15% of the taxable amount.
Corporate income tax in Mauritius
The corporate tax rate is 15%.
It applies to the following:
- Commercial profits;
- Interests;
- Dividends from abroad;
- Rents, commercial income, liberal business income, CPS Current Payment must be declared quarterly to the MRA.
VAT in Mauritius
VAT (Value Added Tax) is an indirect tax on consumer goods and services. The VAT rate in Mauritius is 15%.
However, some products are exempt from VAT in Mauritius, including:
- Medical, hospital and dental services provided in the Mauritian public health system;
- Certain basic foodstuffs such as sugar, margarine, rice, yogurt, edible oils and bread;
- Electricity and water services;
- Export of goods and services;
- Cooking gas marketed in cylinders of up to 12 kg for domestic use;
- Photovoltaic systems.
Is it possible to recover VAT in Mauritius?
The tax authorities provide for the recovery of VAT by individuals in 2 cases:
- Foreign visitors leaving Mauritius;
- Mauritians leaving Mauritius.
Foreign visitors can recover VAT by making their purchases in 1,000 specific shops, displaying the logos: 
For departing Mauritians, this list is reduced to 200 shops.
Useful links:
Taxation of offshore companies in Mauritius
Mauritius has put in place a number of regulations and benefits for offshore companies with the support of several actors: The Mauritius Financial Services Commission, the governing body for the creation and regulation of offshore companies as well as the banking sector as a whole, knowing that both domestic and international banks in Mauritius also welcome non-residents.
Today, the country's offshore environment is vibrant with a wide range of structures, licenses and accounts.
As a result, investors can set up an offshore company in Mauritius, specifically a Global Business Company (GBC) or an Authorized Company (AC).
They can also manage their offshore funds through collective investment schemes or private equity funds.
An offshore company is defined as a company:
- Which establishes its registered office in a foreign country in which it does not carry out any commercial activity,
- Whose responsible managers are not domiciled locally.
The offshore company benefits from certain tax advantages, although it is entirely external and is not involved in the economy of the host country and does not benefit from the facilities offered to local companies.
Good to know:
According to the Government Notice dated 2017, find here the annual fees payable by the different business configurations.
Taxes rates
When considered a tax resident in Mauritius, the GBC is subject to a 15% tax. To prove that it manages and controls its assets from Mauritius, it must:
- Have among its directors 2 residents in Mauritius;
- Lead and chair its board of directors from Mauritius;
- Have a local bank account for the transit of funds;
- Keep its statutory documents and its registered office in Mauritius;
- Hire a qualified local company secretary;
- Hire a local auditor;
- Present minimum annual expenses proportional to the activity of the structure.
Depending on the business activity of the GBC, other substantive requirements may apply.
Offshore trusts
In Mauritius, offshore trusts:
- Are taxable on worldwide income at the prevailing tax rate, i.e., 15%.
- Are obliged to submit an annual tax return to the MRA within 6 months of the end of their accounting period.
- Can claim the 80% partial exemption applicable on their foreign source income, provided that they submit written proof of the amount of foreign tax levied, which must be equal to 80% of the Mauritian tax chargeable on such income.
Note that taxable income is defined as the difference between:
The net income generated by the trust
and
The aggregate amount distributed to beneficiaries in accordance with the terms of the trust deed.
In addition, any amount distributed to non-resident beneficiaries is exempt from income tax.
An offshore trust may apply by written notification to the Mauritian auditor to be treated as a non-resident in Mauritius for tax purposes and be exempted from taxation. In such a case, it cannot benefit from the double taxation agreements signed by Mauritius.
Tax benefits in Mauritius
Tax benefits for individuals
The sine qua non condition to receive tax benefits in Mauritius is the notion of tax residence. Therefore, any company that meets the criteria in force benefits from the following:
- No tax on dividends;
- No tax on capital gains;
- No wealth tax;
- No inheritance tax for direct descendants;
- Profits and dividends from companies located outside Mauritius repatriable without any restriction with a tax rate of 15%;
- 15% tax rate;
- Full tax exemption for import and export activities;
- 15% tax rate for processing activity;
- Exemption from customs duties on all goods imported through the free port;
- Free repatriation of profits.
Tax benefits for businesses
Global Business Companies (GBC) are not subject to:
- Capital gains tax, withholding tax on the payment of dividends, interests or royalties;
- Stamp duty;
- Capital tax;
- Inheritance tax.
Where it owns at least 5% of an underlying company, the GBC receives a credit against the foreign tax paid on the income from which the dividend was paid ("underlying foreign tax credit").
Where a non-Mauritius resident company receives a dividend from another non-Mauritius resident company ("secondary dividend") of which it directly or indirectly owns at least 5% of the share capital, such dividend will qualify as a foreign tax credit and an underlying foreign tax credit.
Interest and royalty payments made by GBC are fully tax deductible in Mauritius.
Tax savings credits in Mauritius
Under this regime, the effective rate of taxation in Mauritius can be reduced through a long-standing provision, which allows GBCs:
- Not to have to provide written proof of the amount of foreign tax collected,
- Benefit from taxation at 80% of the standard rate of 15%, i.e., 12%. Thus, the isolated use of this long-term provision will reduce the effective tax rate in Mauritius from 15% to 3%.
Good to know:
A company that obtained a GBC 1 license after October 16, 2017, can claim a credit only for the actual foreign tax incurred.
