Understanding Mauritius Taxation

Category: About Mauritius

Mauritius Tax System Explained

Domicile corporations in Mauritius pay tax on their worldwide profits, while foreign corporations pay tax only on their local earnings.

If a company meets any of the following conditions, it can be considered a "resident" of Mauritius.

It is legally recognized under the laws of Mauritius.
It is primarily managed and supervised from Mauritius.
A company that has its legal headquarters in Mauritius but whose management is located elsewhere is technically not a resident of the island nation.

Taxes on individuals in Mauritius are calculated based on a self-assessment. The amount of tax due is based on earnings from the prior year. The financial year runs from July 1st to the last day of June.

Mauritius Business Taxation

Businesses in Mauritius pay an income tax rate of 15%. However, there are circumstances under which a business might be eligible for a 3% tax rate.

Earnings from the sale of exported goods, including those made through international transactions in which the goods never leave the exporter's country.
Companies with an Investment Certificate from the Economic Development Board that produce goods for the medical, biotech, or pharmaceutical industries.
Earnings of a college or university in Mauritius that is recognized by the Higher Education Act.

Partial tax exemptions of up to 80% are available for:

Dividends and interest from overseas companies.
Gains from an overseas branch or subsidiary.
Profits generated by an authorized Financial Services Commission Collective Investment Scheme (CIS), closed-end fund, CIS manager, CIS administrator, Investment Adviser, Investment Dealer, or Asset Manager.
Gains from renting out transportation assets like ships, planes, trains, and rail networks.
Profits made through selling or buying reinsurance.
Gains from leasing out fiber optic capacity on a global scale.
Profits made through the purchase, leasing, and management of aircraft, as well as any necessary components and advisory services.
Interest accrued via a P2P lending platform.


Reduced Taxes

In the first eight years of operation, certain businesses can avoid paying taxes.

Businesses that were founded after July 1, 2017 and are using intellectual property in innovative ways.
Businesses that install and service air conditioning systems using water from deep in the ocean.
Organizations that receive their EDB Investment Certificate on or after July 1, 2021.
Organizations with a Global Headquarters Administration Licensing Date of September 1, 2016 or later.
In addition, certain industries and businesses can take advantage of tax breaks that last anywhere from five to ten years.

Responsibility of Corporations to Society (CSR)

Businesses must set aside 2% of their taxable income from the prior year for a Corporate Social Responsibility (CSR) Fund.

Mauritius Taxes on Individual Income

Individual taxable income is the amount left over after subtracting the IET and any other eligible reliefs.

Income earned in Mauritius, minus any applicable exemptions, is subject to taxation for residents. Only earnings generated in Mauritius are subject to taxation by non-residents.

For individuals, the tax rate is a sliding scale from 10% to 15% of their net income.

Persons' Residential Arrangements

Any person who meets the following criteria is considered a tax resident of Mauritius:

Unless he has another permanent place of residence, he is considered to have a domicile in Mauritius.
stayed in Mauritius for a total of 183 days or more.
Has resided in Mauritius for at least 270 days during the current income year and either of the two income years prior to the current income year.
Under certain circumstances, individuals may also qualify for a tax holiday.

Mauriitus Tax for Mutual Aid

Overachievers in India are hit with a solidarity levy of 25% on their annual earnings in excess of Rs 3 million, with the cap set at 10% of the country's total net income and dividends from residents companies.

To reduce income disparity, the solidarity levy is structured as a progressive tax that levies a higher percentage of taxable income from the wealthiest citizens. It's set up to encourage wealth redistribution while keeping the maximum burden on taxpayers to a minimum.

The levy is determined by comparing 25% of the overage income (the amount above Rs 3 million) to 10% of the total net income and dividends from resident companies. The taxpayer's solidarity levy will be the lesser of these two amounts.

If a resident earns Rs 5,000,000 in total net income and also receives dividends of Rs 1,000,000 from companies that are also residents, the levy would be determined as follows.

A quarter of the extra cash flow: Twenty-five percent of (Rs 5,000,000 - Rs 3,000,000) is Rs 500,000.
Ten percent of all dividends and net income: Roughly Rs 600,000 (10% of R5,000,000 + R1,000,000).
In this case, the resident would have to pay a solidarity levy of Rs 500,000 rather than Rs 600,000.

Social programs and other initiatives that aim to assist those with lower incomes can be funded with the money collected from the solidarity levy, which is a form of taxation. Therefore, the solidarity levy not only helps the government bring in more money, but it also helps achieve the social goal of equalizing people's incomes.

Note that while every effort has been made to ensure the accuracy of this information, it should not be used as a substitute for consulting with a tax professional or the relevant government agency, as tax laws are complex and subject to change and interpretation.

Currently, 45 countries have signed double taxation agreements with Mauritius, and more are in discussion. For a full rundown of the countries where treaties of this kind are currently in effect gp to: https://www.veri-global.com/article/103/mauritius_tax_regulations/

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2023-05-18 09:30:41

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