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DOING BUSINESS IN MAURITIUS

Mauritius Business Services Overview About Mauritius Setting up a Business in Mauritius Taxation Living & Working in Mauritius

SETTING UP A BUSINESS IN MAURITIUS

Mauritius Global Business Company with a Category 1 License

Type of Entity

Company holding a Category 1 Global Business License

Type of Income

Chargeable Income 15%
Dividends paid out of income derived by a GBC 1 Exempt
Interest paid by a GBC 1 to a non- resident Exempt
Capital gains realised on securities by non- residents Exempt

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Foreign Tax Credit

A company which has suffered a tax on its foreign source income is entitled to the following tax credits as per the ITA 1995:

  • A credit for foreign income tax paid on its foreign source income.
  • A sparing tax credit – a credit for tax deemed to have been paid.
  • In the case of dividend income, an underlying tax credit, i.e. credit for tax paid on income out of which the dividends have been paid under certain conditions.
  • The foreign tax credits should not in the aggregate exceed that of the Mauritius tax payable on such foreign source income.

The Income Tax (Foreign Tax Credit) Regulation 1996 (under the Income Tax Act 1995) allow for foreign tax credit on the foreign source income of a Mauritian resident which is 80% of the Mauritian tax rate (leaving a residual liability of 20% of the Mauritian tax rate = 3%). It is to be noted that such presumed foreign tax is available for qualified corporations.

In drafting the Foreign Tax Credit Regulations, the approach has been to be as generous as possible to the taxpayer with regard to foreign tax credit. Mauritius wishes to avoid international double taxation and not to have such double taxation operating as a block to foreign investment. Thus, in number of matters, these Regulations are as generous as or more generous than provisions found in the laws of other countries. The foreign tax credit is available for the amount of income actually received in Mauritius and is treated as a foreign tax which is of similar character to the Mauritian income tax. In calculating the tax credits, the Regulations allow for the grossing up of the foreign source income, and provide in respect of foreign tax charged on dividend, credit for the underlying tax charged in the foreign country on profits out of which the dividend is paid. The underlying tax is available to all residents of Mauritius, whether they are companies, individuals or trusts. However, a holding of 5% of the share capital in the paying company is required. The amount of foreign tax credit is limited to the lower of the actual amount of foreign tax or the amount of Mauritius tax. If for example, the foreign tax is at a rate higher than the Mauritius tax, the surplus foreign tax cannot be credited. Moreover, the tax payer can choose to compute the limit either on an item basis or on an overall basis.

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