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Mauritius: Tax measures in proposed finance legislation

Mauritius: Tax measures in proposed finance legislation

The Finance (Miscellaneous Provisions) Bill 2018 was released in July 2018 for consultation and introduced in Parliament. The draft legislation incorporates tax measures that would affect corporate and individual taxpayers and were previously announced in the Minister of Finance’s budget speech.

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There are also indirect tax measures included in the bill. For instance, when capital goods (e.g., plant and machinery) are entered and cleared on import by a VAT-registered person, the payment of VAT (value added tax) at import could be deferred by including the deferred VAT as output tax, provided that certain conditions are satisfied.

Among the tax measures in the bill are provisions that would exempt companies with a “Category 2” global business licence issued on or before 16 October 2017 from income tax until 30 June 2021. 

Under a new tax regime, an income tax exemption of 80% would apply for the following:

  • Foreign-source dividend, provided the dividend has not been allowed as a deduction in the “source country” and the company satisfies the conditions relating to the substance of its activities as prescribed
  • Foreign-source interest, provided the company satisfies the conditions relating to the substance of its activities as prescribed
  • Profit attributable to a permanent establishment which a resident company has in a foreign country
  • Overseas income derived by a collective investment scheme (CIS), closed-end fund, CIS manager, CIS administrator, investment adviser or asset manager, provided the company satisfies the conditions relating to the substance of its activities as prescribed
  • Overseas income derived by a company engaged in ship and aircraft leasing, provided the company satisfies such conditions as may be prescribed relating to the substance of its activities

In addition, the measures would provide: 

  • No credit would be allowed on foreign -source income when the 80% exemption has been claimed.
  • The definition of foreign-source income would be changed to “income which is not derived from Mauritius.”
  • Up to 30 June 2021, the current definition of foreign-source income would continue to apply to corporations issued with “Category 1” global business licence on or before 16 October 2017.

 

Read a July 2018 report [PDF 1.6 MB] prepared by the KPMG member firm in Mauritius

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