Mauritius encourages foreign investment and consequently has introduced various tax incentives while adhering to international standards. An OECD-compliant (Organisation for Economic Cooperation and Development) jurisdiction, Mauritius adheres to standards of international measures of transparency.
In order to claim tax benefits in Mauritius, tax residency is an essential requirement.
There are various benefits to corporations who need the following set of criteria:
- No taxation on dividends
- No capital gains tax
- No inheritance tax for direct descendants
- Repatriation of funds (profits and dividends) from a foreign company at a tax rate of 15%
- Tax Rate of 15%
- Full tax exemption on import-export activities
- Tax rate of 15% on manufacturing activities
- Exemption from customs’ duties for all goods imported through the Freeport
The income tax system in Mauritius is the “PAYE” (Pay As You Earn) system. Income tax is deducted directly from salaries and remitted to the Mauritius Revenue Authority by the employer. Double taxation agreements exist between Mauritius and numerous countries including the UK, South Africa, Germany, Australia, China, and India, whereby citizens of those countries do not have to pay taxes in their country of origin as well as in Mauritius.
Revenue from salaries, wages, and pension funds is deducted at source under the PAYE system by the employer. The employee must declare any income aside from their salary (e.g. interests, royalties, dividends from a foreign source, etc.) on an Employee Declaration Form (EDF) which is provided by the employer so that the latter can calculate the income tax and deduct the relevant amount.
Once a year the employee has to submit his income tax return to the Mauritius Revenue Authority (MRA). A tax resident in Mauritius can benefit from the Income Tax Threshold Exemption (IET) which starts at Rs. 300,000 and goes up to Rs. 550,000 (for 2018). This depends on the category of the individual, including how many dependents the individual has. The IET allows for any revenue of the individual, below or equal to their determined threshold, to be exempt from taxation.
The fixed rate for taxes for individuals is 15%.
A solidarity levy applies to individuals who are tax residents in Mauritius and have a leviable income of Rs. 3.5 million. If the amount exceeds Rs. 3.5 million, an additional levy of 5% is imposed on the leviable income. This amount is payable at the time of the submission of the individual’s tax return.
Corporate income tax
Corporate income tax is fixed at 15%. This applies to:
- profit derived from the business activities interests received
- foreign dividends received
- rent received
Where an individual derives income from rent or other business activities, they have to fill out the tax returns quarterly under the Current Payment System, unless the income is less than Rs. 4 million for the previous year, or the tax payable under the CPS is no more than Rs. 500.
Similarly, corporations that are tax residents in Mauritius have to adhere to the Advance Payment System (APS) and submit quarterly returns to the MRA, unless their gross income for the preceding accounting year was less than Rs. 10 million, or there was no chargeable income.
The financial year begins on July 1st and ends on June 30th of the following year.
Tax returns must be submitted to the MRA by the 30th of September if submitting in person or by mail, or electronically by the 15th of October at the latest.
The VAT rate in Mauritius is fixed at 15%.