Reforms in Global Business Sector
- The Category 1 Global Business Licence (GBC1) is renamed Global Business Licence (GBL).
- Effective from January 2019, the deemed Foreign Tax Credit (FTC) regime available to GBC1 companies has been abolished.
- Introduction of an 80% partial exemption regime has been introduced on the following income (amongst others):
- Foreign-source dividend (not allowed as deduction in source country).
- Interest income.
- Profit attributable to a permanent establishment (PE) that a resident company has in a foreign country.
The 80% exemption is available upon satisfaction of the pre-defined substance requirements issued by the Financial Services Commission (FSC).
- Effective from January 2019, Category 2 Global Business Licence (GBC2) has been abolished.
- Companies conducting business and having their place of central management outside of Mauritius will be required to apply to the FSC to be registered as an Authorised Company.
- An Authorised Company will be treated as a non-resident for tax purposes in Mauritius.
Innovation-driven activities for intellectual property (IP) assets
An income tax exemption is available for companies set up on or after 1 July 2017, which are involved in innovation-driven activities for IP assets developed in Mauritius. The exemption will apply for eight tax years, starting from the tax year in which the company starts its innovation-driven activities. Similar tax exemptions have been introduced for income derived from the manufacture of pharmaceutical products, medical devices, and high-tech products by companies incorporated after 8 June 2017; these will be available for eight years from the tax year in which the company starts operation.
Exploitation and use of deep ocean water for air conditioning installations
Income derived from the exploitation and use of deep ocean water for air conditioning installations, facilities, and services will be exempted for eight tax years. Additionally, a company incurring expenditure on deep ocean water air conditioning may deduct from its gross income twice the amount of the expenditure incurred in that tax year. That deduction will be allowed for five consecutive tax years, starting from the year in which the expenditure is incurred.
Expenditure on research and development (R&D)
During the period from 1 July 2017 to 30 June 2022, if a person has incurred any qualifying expenditure on R&D as described below that is directly related to one’s existing trade or business, one may, in the tax year in which the qualifying expenditure was incurred, deduct twice the amount of the expenditure, provided that the R&D is carried out in Mauritius and no annual allowances have been claimed on the same. The term ‘qualifying expenditure’ means any expenditure relating to R&D, including expenditure on innovation, improvement, or development of a process, product, or service, as well as staff costs, consumable items, computer software directly used in R&D, and development and subcontracted R&D.
Reduced tax rate for companies exporting goods
A company involved in the export of goods will be liable to income tax at the reduced rate of 3% on the chargeable income attributable to exports, as computed on the basis of the following formula:
Chargeable income attributable to exports = (A x C/B), in which:
- A is the gross income derived from the export of goods in that income year.
- B is the gross income derived from all the activities of the company for that income year.
- C is the chargeable income of the company for that income year.