Income tax incentives: 2019-2020 measures
The 2019-2020 Budget proposed several fiscal measures that aims at consolidating the existing tax framework and at aligning the island’s tax regime with international standards. The government announced further investment in the public infrastructure and in incentives related to innovation-driven activities. These will establish Mauritius as a fintech hub. Additionally new legislations will be introduced in terms of controlled foreign companies. Tax Holidays for companies Innovation Box Regime: Companies that have been recently set up and that are engaged in innovation-driven activities will be able to benefit from a tax holiday of 8 years on income derived from their intellectual property assets developed in Mauritius. However, they must meet pre-defined requirements that are in line with BEPS regulations. Additionally, as from the 10th of June 2019, even existing companies could benefit from the eight-year tax holiday. E-commerce platforms: Companies that aim to operate an e-commerce platform and that will be implemented before the 30th of June 2025 will be granted a 5 year tax holiday. Peer-to-Peer landing: In 2018, the FSC published the Peer-to-Peer Lending Rules. Following this, it has been announced that Peer-to-Peer lending operators will benefit from a 5 year tax holiday on the condition that they become operational before the 31st of December 2020. These measures are in line with the government’s vision to position Mauritius as a hub for innovation-driven activities. Taxation of banks Income derived by banks from Global Business Companies will not be subject to the levy under the Value Added Tax Act 1998. Banking institutions with an operating income more than 1.2 billion MUR per year will attract a levy of 4.5% on their operating income. This levy will not be categorised as a deductible expense under corporate tax and no foreign tax credit will be allowed. Banks which offer a minimum of 5% of their new banking facilities to SMEs in Mauritius, to companies operating in agricultural, manufacturing or production of renewable energy in Mauritius or to operators in African or Asian countries will be able to enjoy a tax rate of 5% on its chargeable income in excess of its chargeable income in the base year (2017/2018). Carry Forward of Unrelieved Tax losses The government further announced that a company will not be able to carry forward its accumulated losses if there is a change in the ownership of the company. However, in the case of a manufacturing company, the latter will be allowed to do so if the appropriate Minister deems that it is in the public interest to do so. This is subject to the fulfilment of conditions related to safeguard of employment. It should be noted that the above recommendations were announced by the current Prime Minister, Minister of Home Affairs, External Communications and National Development Unit and Minister of Finance and Economic Development as part of the 2019/2010 tax changes. However, the Budget proposals may be significantly amended before enactment. As such, do not hesitate to consult us if you wish to determine a specific investment strategy related to specific circumstances.
Establishment of offshore companies in Mauritius: non-double taxation agreements
Since launching its international business sector in 1992, Mauritius has signed 43 tax agreements (non – double taxation agreements as well as Double Taxation Agreements – DTAs) with various countries and others are in the process of being negotiated. The island is definitely a commercially attractive destination for investors. Since then, the country has developed its expertise in the field of taxation, becoming one of the local, regional and international leaders in business and trade. What is the purpose of the tax treaty? The tax treaty is not only used to negate double taxation for individuals and businesses alike. In addition to covering income taxes, VAT or other taxes, it also serves the purpose of: Reducing taxes for residents of one of the two signatory countries Eliminating double taxation in favour of a tax credit equivalent to Mauritian tax, Reducing the withholding taxes on dividends, interest and royalties, Exempting capital gains, Conditionally exempting interest payments on loans, Removing exchange controls In addition, non-double taxation agreements (DTAs) provide tax planning opportunities, thus strengthening the image of the jurisdiction as a tax planning centre, allowing control over tax evasion as well as improving the efficiency of cross-border trade. List of Mauritius’ non-double taxation agreements Africa Agreements signed Botswana, Egypt, Lesotho, Madagascar, Mozambique, Namibia, Republic of the Congo, Rwanda, Senegal, Seychelles, South Africa, Swaziland, Tunisia, Uganda, Zambia, Zimbabwe Pending ratification Gabon, Ghana, Kenya, Morocco, Nigeria To be signed by the country Burkina Faso, Cape Verde, Côte d’Ivoire Under negotiation Algeria, Malawi, North Sudan, Tanzania Asia Agreements signed Bangladesh, China, India, Malaysia, Nepal, Pakistan, Singapore, Sri Lanka, Thailand Pending ratification Russia Under negotiation Hong Kong, Vietnam Europe Agreements signed Belgium, Croatia, Cyprus, France, Germany, Italy, Luxembourg, Malta, Sweden, United Kingdom Under negotiation Czech Republic, Greece, Montenegro, Portugal, Spain Middle East Agreements signed Kuwait, Oman, Qatar, United Arab Emirates Under negotiation Iran, Saudi Arabia, Yemen North America Under negotiation Canada West Indies Agreements signed Barbados Under negotiation Saint Kitts and Nevis Other Agreements signed Australia (partial), Guernsey, Monaco To be signed by the country Jersey Under negotiation Gibraltar
