Mauritius Taxes Overview
Mauritius personal Income Tax
Mauritius personal tax rate is a flat 15%.
As from 1 January 2010, the fiscal year will be on a calendar year basis.
Income Tax is payable by residents on non-exempt income derived from Mauritius
less allowable deductions. Employers deduct income tax from each salary payments of all individual taxpayers.
Individuals deriving rental income and or income from business or profession exceeding a certain threshold submit a statement of their income on a quarterly basis.
Basis – Mauritius residents are taxed on Mauritius-source income and foreign income remitted to Mauritius. Nonresidents are taxed only on Mauritius-source income.
Residence – An individual is resident if he/she is domiciled in Mauritius, spends more than 6 months of the tax year in Mauritius or has a combined presence of at least 270 days in that tax year and the 2 preceding tax years.
Tax Filing status – Separate assessment is compulsory for a married couple. Joint income can be declared in any proportion.
Taxable income – Taxable income includes employment income, pensions, profits from a trade and profession, rents and interest.
Capital gains – No tax is levied on capital gains in Mauritius.
Tax Deductions and tax allowances – Only one deduction, called the “Income Exemption Threshold” is granted.
Capital duty – No
Stamp duty – No
Capital acquisitions tax – No
Inheritance/estate tax – No
Net wealth/net worth tax – No
Real property tax – A National Property Tax is levied on residential property.
Social security – Employees are required to make pay-related social security contributions (NPS) equal to 3% of the monthly basic salary (capped).
Administration and compliance:
Tax year – Calendar year to 31 December Filing and payment – Tax on employment income is withheld monthly by the employer under the PAYE system and remitted directly to the tax authorities. Income not subject to PAYE is self-assessed, and the individual must make quarterly payments and file a tax return by 31 March.
Penalties – Penalties apply for late filing and interest is imposed for late payment of tax liability.
Mauritius Company Tax
Mauritius company tax rate is a flat 15%.
The main income tax legislation in Mauritius is the Income Tax Act 1995 as amended by subsequent Finance Acts. Corporate and Personal Taxes are embodied under one heading of Income Tax and are payable by all resident companies and individuals on non-exempt income derived from Mauritius and from other sources. The profits of all Resident ‘Sociétés’ (Partnerships) are taxable in the hands of the associates in proportion to their profit sharing ratio. A non-resident société is liable to income tax as if the société was a company.
ALTERNATIVE MINIMUM TAX (AMT)
Where in the case of a company the normal tax payable is less than 7.5% of its book profit, the tax payable for that income year is deemed to be 7.5% of its book profit or 10% of any dividends declared in respect of that year, whichever is the lesser. This alternative minimum tax is applicable in certain specific cases.
Offshore Companies (now known as Corporation Holding Category 1 Global Business Licence) pay tax at a rate of 15%. Tax credit up to 80% is available. Offshore International Companies (now Corporation Holding Category 2 Global Business Licence) are exempt from tax.
DUE DATES FOR PAYMENT OF TAX
Companies must file tax returns and pay any income tax not later than six months from the end of the month in which the accounting period ends.
ADVANCE PAYMENT SYSTEM (APS)
Companies, unit trust schemes, collective investment trusts, société holding Category 1 Global Business Licence, must submit an APS Statement in respect of each of the three months period commencing the 1st day of the accounting year and pay any tax in accordance with the APS Statement within three months from the end of the quarter.
CAPITAL GAINS TAX
There is no Capital Gains Tax in Mauritius.
BRANCH PROFITS TAX
There is no Branch Profits Tax in Mauritius.
NATIONAL RESIDENTIAL PROPERTY TAX
National Residential Property Tax (NRPT) is payable by individuals and companies subject to certain conditions.
FRINGE BENEFITS TAX
Employees receiving any advantage in money or money’s worth are taxed thereon. Certain incomes are exempt:
– rent and housing allowance for certain persons
– passage benefits, limited to 6% of basic salary
– the first Rs 1 million of lump sum paid on retirement or death
All taxes are on a ‘national’ basis but municipal and district councils are empowered to levy property tax, entertainment tax and certain licences.
DETERMINATION OF TAXABLE INCOME
The taxable income is determined by ascertaining the assessable income and then deducting any expenditure or loss in the income year to the extent to which it is exclusively incurred in the production of gross income (other than ’emoluments’).
For emoluments, the expenditure must be wholly, exclusively and necessarily incurred in performing the duties of an office or employment.
The unauthorised deductions are:
– investment, expenditure or loss of a capital, private or domestic nature
– expenditure or loss incurred in the production of exempt income or which is recoverable under a contract of insurance or indemnity
– income tax or foreign tax
– any expenditure incurred in providing business entertainment or gifts
Annual Allowances are available on capital expenditure incurred exclusively in the production of gross income. The rate of annual allowance varies from 5% to 100% depending on the type of asset and is calculated on the base value or on cost.
DIVIDENDS PAID BY RESIDENT COMPANIES
Dividends paid by resident companies are exempted. Interest paid for the purpose of a business only is allowed as a deduction.
Royalties paid to a non resident by a company holding a Category 1 Global Business Licence or a Category 2 Global Business Licence (issued under the Financial Services Act 2007) are exempted.
All interest income accruing to an individual or company is taxable. However, the following is exempt:
On Interest payable by a bank
(1) To an individual who is not resident in Mauritius
(2) To a corporation holding Category 1 Global Business Licence.
Losses can be carried forward (but not backwards) for set off against income derived in the five succeeding income years provided that there is continuity; i.e. that 50% in nominal value of the allotted shares and not less than 50% of the paid up capital was held by or on behalf of the same person. If a company engaged in manufacturing activities is taken over by another company or two or more companies engaged in manufacturing activities merge into one company, any unrelieved loss of the acquiree may be transferred to the acquirer in the income year in which the takeover or merger takes place on such conditions relating to safeguard of employment of the companies.
FOREIGN SOURCED INCOME
Income derived from outside Mauritius by a resident is taxable in the normal manner subject to double taxation relief.
With effect from assessment year 2007/08 most incentives have been removed. The exceptions are:
(a) deduction of twice the emoluments paid to a disabled person
(b) transfer of loss of a manufacturing company by another company on take over or merger
(c) additional investment allowance on capital incurred on the acquisition of state-of-art technological equipment by a manufacturing company. As from 1st July 2008, an ICT company is no longer entitled to any investment allowance.
SPECIAL LEVY ON BANKS
The rate of special levy payable by every bank subject to certain conditions is as follows with effect from 1 July 2009.
Years of assessment commencing
1 July 2009: 3.4% on book profit and 1% on operating income
1 July 2010: 3.4% on book profit and 1% on operating income
1 January 2011 and in respect of every subsequent year of assessment: 1.7% on book profit and 50% on operating income
SOLIDARITY LEVY ON TELEPHONY SERVICE PROVIDERS
A provider of public fixed or mobile communication networks and services, called
an operator, shall be liable to pay a levy calculated at the rate of 5% of the book
profit and 1.5% of the turnover of the operator in respect of each of the years of
assessment commencing 1 July 2009 and 1 January 2010 subject to certain
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Every profitable company is required as from 1 July 2009 to spend 2% of its book profit derived during the preceding year to implement:
(a) an approved programme by the company
(b) an approved programme under the National Empowerment Foundation or
(c) Finance an N.G.O.
For the purpose of C.S.R. company does not include:
(a) a company holding a Category 1 Global Business Licence
(b) a bank holding a banking licence under the banking Act in respect of its income derived from its banking transactions with non-resident or corporation holding Global Business Licence.
(c) An Integrated Resort Scheme (IRS) Company
(d) A non resident société, a trust or a trustee of a unit trust scheme
Offshore corporations are now known as companies holding a Category 1 Global Business Licence.
Offshore corporations (companies, trusts, sociétés) have special fiscal regimes and incentives such as customs duty remission and concessionary income tax rates for expatriates. Generous tax credits are available to those companies.
Resident trusts are taxed at 15%. Deemed tax credit of 80% is available to the trusts. Non-resident trusts and their non-resident beneficiaries are exempt from taxes.
Every associate of a société holding a Category 1 Global Business Licence is liable to income tax in respect of its share at the rate of 15%.
FOREIGN TAX RELIEF
Unilateral relief is provided for in the Income Tax Act. In the event of double taxation relief is by way of an ordinary credit. The taxpayer may elect to claim the credit on aggregate foreign-source income or on a source-by-source basis.
The general rule is that no group relief is allowed except in a few special cases.
RELATED PARTY TRANSACTIONS
The tax authorities may adjust the liability of a taxpayer where it considers that a transaction has not been entered into or carried out by persons dealing at arm’s length. It must be of the opinion that avoidance or reduction of liability of tax was the main purpose of such a transaction.
The rates for withholding taxes are as follows:
Companies Individuals Companies Individuals
Interest 0% 15% 0% 0%
Royalties 10% 10% 15% 15%
Rent 5% 5% 5% 5%
Contract payment 0.75% 0.75% 0.75% 0.75%
Services 3% 3% 3% 3%
Mauritius vat (Value added tax)
Mauritius VAT is charged on taxable supplies (both goods and services) made in Mauritius at a standard rate of 15%.
Certain items such as basic foodstuffs and medical and educational services are exempted while exports are zero rated.
The threshold for VAT registration is a turnover of taxable supplies exceeding Rs 2m per year. VAT Registration is compulsory irrespective of the annual turnover for persons engaged in certain business or profession. There is at present no double taxation agreement for VAT.
Filing and VAT payment – Filing and payment is made on a monthly or quarterly basis.