Mauritius

Global Business Licence (GBL) companies

As of 1 January 2019, GBC1 companies have been renamed as GBL companies. 

As of 1 January 2019, the deemed FTC regime available to GBC1 companies has been abolished and the following now applies:

• Introduction of an 80% exemption regime on the following income, subject to meeting substance conditions: 
  • Foreign dividend, subject to amount not allowed as deduction in source country.
  • Interest income.
  • Profit attributable to a PE of a resident company in a foreign country.
  • Foreign-source income derived by a CIS, Closed End Funds, CIS manager, CIS administrator, investment adviser or asset manager licensed or approved by the FSC.
  • Income derived by companies engaged in ship and aircraft leasing.
  • Interest income derived by a person from money lent through a peer-to-peer lending platform operated under a licence issued by the FSC after the five-year tax holiday.
  • Income derived from the leasing and provision of international fibre capacity.
  • Income derived from reinsurance and reinsurance brokering activities.
  • Income derived from the sale, financing arrangement, and asset management of aircraft and its spare parts, including aviation-related advisory services.
  80% exemption on the above activities is subject to satisfying prescribed conditions.
• 95% tax exemption on interest earned by a CIS or Closed End Funds.
• No actual foreign tax credit is allowed on foreign-source income if the GBL company has claimed the 80% exemption.

The registration and application of GBLs should be submitted to the FSC through a duly licensed Management Company on a prescribed form accompanied by the following:

• The certified supporting documents.
• The applicable processing fees and relevant fees.

A GBL is tax resident in Mauritius and may apply for a Tax Residence Certificate (TRC) from the Director General of the MRA should this be required by the tax authorities in the jurisdiction in which the company is conducting its business.

Investors may benefit from an extensive network of double taxation treaties (DTTs). Entities holding a GBL wishing to benefit from a DTT must obtain a TRC issued by the MRA. The TRC is generally issued within a period of seven days from the date of application, provided that the person has submitted the return required under the ITA 1995.

The Financial Services Act has been amended to include the following conditions that should at all times be satisfied by a GBL company:

• The core income generating activities of the GBL should be in or from Mauritius, as required under the Income Tax Act.
• The GBL companies should be managed and controlled from Mauritius and be administered by a management company.

In order for a GBL to be managed and controlled from Mauritius, it should meet the following conditions:

• It has at least two directors, resident in Mauritius, of sufficient calibre to exercise independence of mind and judgment.
• It maintains, at all times, its principal bank account in Mauritius.
• It keeps and maintains, at all times, its accounting records at its registered office in Mauritius.
• It prepares, or proposes to prepare, its statutory financial statements and causes or proposes to have such financial statements to be audited in Mauritius.
• It provides for meetings of directors to include at least two directors from Mauritius.

In order to benefit from the 80% exemption, a company may outsource any relevant activities to third party service providers, provided that:

• the company is able to demonstrate adequate monitoring of the outsourced activities
• the outsourced activities are conducted in Mauritius, and
• the economic substance of service providers is not counted multiple times by multiple companies when evidencing their own substance in Mauritius.

As of January 2019, the Category 2 Global Business Licence (GBC2) has been abolished, and companies previously holding a GBC2 licence must apply for an authorisation from the FSC as an Authorised Company. An Authorised Company will be required to file a return of income to the MRA within six months of its year-end. However, an Authorised Company is treated as a non-resident for tax purposes in Mauritius and will be taxed on Mauritius-source income only. 

Only a management company shall act as the registered agent of an Authorised Company. An Authorised Company is a company conducting business outside Mauritius and can engage in activities other than the following:

• Banking.
• Financial services.
• Holding, managing, or otherwise dealing with a collective investment fund or scheme as a professional functionary.
• Providing registered office facilities, nominee services, directorship services, secretarial services, or other services for corporations.
• Providing trusteeship services by way of business.

An applicant for an Authorised Company must submit the following forms/documents to the FSC through a management company:

• The application form, duly filled in and signed.
• The certified supporting documents.
• The applicable processing fees and relevant fees.

Companies in the Freeport zone

Freeport operators and private Freeport developers will no longer be exempted from income tax. However, Freeport licences issued on or before 14 June 2018 will continue to benefit from the current tax exemption until 30 June 2021.

Effective as of the year of assessment commencing on 1 July 2020, Freeport operators or private Freeport developers engaged in the manufacture of goods will be liable to tax at the rate of 3% from sale of goods on local market, provided certain substance conditions are met.

Freeport operators will be liable to Corporate Social Responsibility (CSR) on local sales.

Income tax exemption for vessel owners

Owners of foreign vessels registered in Mauritius are exempt from income tax on income derived from the operation of such vessels, including any income derived from the chartering of such vessels. Owners of local vessels registered in Mauritius are also exempt to the extent that the income is derived from deep-sea international trade only.

Innovation-driven activities

An income tax exemption is available for companies set up on or after 1 July 2017 that 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.

Manufacture of pharmaceutical products, medical devices

An income tax exemption is available for companies set up on or after 8 June 2017 for the manufacture of pharmaceutical products, medical devices, and high-tech products by companies incorporated after 8 June 2017. This exemption also applies for eight tax years, starting from the tax year in which the company starts its operations.

Green economy

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. Further, 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.

Another tax exemption has been granted for interest derived by individuals and companies from debentures or bonds issued by a company to finance renewable energy projects (the issue must be approved by the Director General of the MRA).

If a company incurs expenditure in a tax year for the acquisition and setting up of a water desalination plant, it may deduct from its gross income twice the amount of the expenditure incurred in that tax year.

R&D expenditure

During a 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.

Export of goods

A reduced corporate tax rate has been introduced for exports of goods so that if, in a tax year, a company is engaged in the export of goods, it will be liable to income tax at the reduced rate of 3% on the chargeable income attributable to that export, as computed on the basis of the following formula:

Chargeable income attributable to that export = (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.

Import of goods in semi knocked down form

Companies importing goods in semi knocked down form are entitled to an investment tax credit of 5% over three years (up to 30 June 2020) on the acquisition of new plant and machinery, excluding motor cars, are subject to a local value add of at least 20%. Tax credit will be available on investments up to 30 June 2020.

Foreign tax credits

Generally, double taxation is avoided by means of unilateral credit relief for foreign tax paid. The net amount of foreign income that has borne tax is grossed up at the foreign rate of tax, and the foreign tax paid is allowed as a credit against the Mauritius tax payable. However, the tax credit cannot exceed the Mauritius tax referable to the relevant foreign income. Unused credit is not refunded.

Regarding foreign income derived from countries with which Mauritius has DTTs, a tax credit is given for foreign tax in accordance with the treaties. There are clauses in the DTTs that provide that income arising from certain specified foreign sources is to be exempt from Mauritius tax.

Mauritius has signed DTTs with 44 countries (see the Withholding taxes section for a listing).

The following treaties await ratification: Gabon, Ghana, Jersey, Morocco, Nigeria, and Russia.

The following treaties await signature: Cote d'Ivoire, Gibraltar, Kenya, Malawi, and The Gambia.

The following treaties are being negotiated: Algeria, Burkina Faso, Canada, Czech Republic, Greece, Hong Kong, Lesotho, Mali, Montenegro, North Sudan, Portugal, Republic of Iran, Saudi Arabia, Spain, St. Kitts and Nevis, Tanzania, Vietnam, Yemen, and Zambia.

In the case of actual foreign tax credit claimed on foreign dividends, the general tax credit includes foreign tax imposed on the profits out of which the dividends are paid (underlying tax), provided that the shareholding in the foreign company is at least 5%.

Mauritius also allows a tax-sparing credit under its local tax legislation.