Inventories should be valued at the lower of historical cost or net realisable value. The last in first out (LIFO) basis of valuation is not allowed for tax purposes.
Conformity is required between book and tax reporting. Where the MRA is not satisfied that the basis of valuation is acceptable (e.g. where the LIFO basis has been applied), it will make such adjustment as it believes is appropriate to determine the profits arising from the business carried on.
There is no tax on capital gains in Mauritius. However, certain transactions are taxed as ordinary business profit instead of capital gains. Where a transaction is in the nature of trade, the MRA may take the view that it is an ordinary trading transaction and assess the gains derived as income.
Any gains derived from the sale of shares held for less than six months are classified as trading income and are therefore taxed as ordinary income.
Gains realised from the sale of any property or interest in property acquired in the course of a business, as part of a profit-making undertaking or scheme, are taxable as ordinary income.
Companies, whether resident or not, are exempt from tax on dividends received from resident companies.
Dividend income received from abroad by a company resident in Mauritius is subject to tax at the rate of 15%. The company can claim either:
- The 80% partial exemption on gross amount received; or
- Credit for any foreign tax withheld, subject to documentary evidence being available.
Dividend income received from abroad by a company resident in Mauritius (including a GBL) is therefore subject to tax at an effective rate of 3%, subject to meeting prescribed conditions.
A resident company can distribute stock dividends (bonus shares) proportionately to all of its shareholders. Stock dividends per se or convertible into cash are not taxable in the hands of the recipient. Dividends in kind (i.e. other than cash or shares) are treated as taxable benefits.
Interest income received by resident companies (including a GBL) is liable to tax at the rate of 15%. The interest income (excluding bank interest) will qualify for 80% exemption on gross amount received, subject to meeting prescribed conditions.
Interest income paid by any person, other than by banks or non-bank deposit-taking institutions under the Banking Act, to individuals and non-residents is liable to withholding tax (WHT) at the rate of 15% (final tax). Interest payments by a GBL to a non-resident out of its foreign source income is exempt from WHT.
Royalty income received locally is subject to tax at the rate of 15%.
Royalty income received from abroad is subject to tax at the rate of 15%. Any tax withheld from abroad will be allowed as a foreign tax credit.
Resident corporations are taxed on their worldwide income, but tax credit and treaty relief is generally available in order to avoid double taxation (see Foreign tax credits in the Tax credits and incentives section for more information).