There are no group taxation provisions in the Mauritius tax legislation other than the transfer of losses by tax incentive companies, sugar factory operators, subsidiaries located in the Island of Rodrigues, and manufacturing companies upon their take-over (see Net operating losses in the Deductions section for more information).
Mauritius does not have any specific transfer pricing legislation. However, there is an arm's-length provision requiring transactions between related parties to reflect a commercially objective value, which would be the amount charged for the services were the parties not connected.
Country-by-country (CbC) reporting
The government of Mauritius enacted the Income Tax (Country-by-Country Reporting) Regulations (CbCR) 2018 on 19 February 2018. These regulations will be effective for the reporting fiscal years of multinational enterprise (MNE) groups beginning on or after 1 July 2018.
The purpose of CbCR is to provide local tax authorities with visibility regarding an MNE's revenue, profit, tax paid and accrued, stated capital, accumulated earnings, number of employees, tangible assets, and activities.
CbCR applies to MNEs with annual consolidated group revenue equal to or higher than 750 million euros (EUR). The tax authority with which the CbC Report is filed will exchange the CbC Report with the tax authority in other jurisdictions where the group has operations. Any person who fails to comply with any provision of CbCR shall commit an offence and shall, on conviction, be liable to a fine not exceeding MUR 5,000 and to imprisonment for a term not exceeding six months.
Mauritius does not have specific thin capitalisation legislation; however, other anti-avoidance provisions as described below may apply.
If a company has issued debentures to its shareholders (subject to the number, the nominal value, or paid-up value of the shares in that company), any interest paid on debentures and claimed as a deductible expense may be disallowed and treated as a dividend.
Controlled foreign companies (CFCs)
CFC rules have been introduced in Mauritius effective as of the year of assessment commencing 1 July 2020. The attribution of CFC income shall be calculated in accordance with the arm’s-length principle.
A CFC is a company that is not resident in Mauritius and in which a resident company in Mauritius or together with associated enterprises holds more than 50% of its total participation rights directly and indirectly. A CFC also includes a PE of the resident company.
CFC rules are not applicable where, in an income year,:
- accounting profits are less than EUR 750,000 and non-trading income is less than EUR 75,000
- accounting profits are less than 10% of its operating costs of the tax period, or
- the tax rate in the country of residence of the CFC is more than 50% of the tax rate in Mauritius.
The CFC rules applies where the MRA consider that the non-distributed income of the CFC arises from non-genuine arrangements designed for obtaining tax benefits.