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International aspects of Taxation

 

  1. Companies holding Category 1 Global Business Licence
  2. Companies holding Category 2 Global Business Licence
  3. Credit for foreign tax paid
  4. Notice on Obligation to furnish information for exchange purpose

 

  1. Companies holding category 1 global business licence

    A company holding a Category 1 Global Business Licence is liable to tax at the rate of 15%.

     

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  2. Companies holding category 2 global business licence

    A Company holding a Category 2 Global Business Licence is exempt from tax. It is considered as  non-resident  for treaty purposes and is thus not covered by any Double Taxation Agreement concluded by Mauritius, except for exchange of information purposes, if the agreement so provides.

     

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  3. Credit for foreign tax paid

    Residents of Mauritius are eligible to a tax credit in respect of foreign tax paid on their foreign source income. The foreign tax credit includes tax sparing credit and in the case of dividends credit is also granted for underlying tax charged on profits out of which the dividends are paid.

     

    Where, in the case of a company holding a Category 1 Global Business Licence or a bank holding a banking licence under the Banking Act 2004 in so far as its banking transactions with non-residents and corporations holding a Category 1 Global Business Licence are concerned, written evidence is not presented to the Director General showing the amount of foreign tax paid, the amount of foreign tax paid is presumed to be equal to 80% of the Mauritius tax.

     

    Credits for foreign tax are allowed in accordance with the Income Tax (Foreign Tax Credit) Regulations.

     

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  4. Notice on obligation to furnish information for exchange purposes

    1. Under section 124(1)(b) of the Income Tax Act every person, when so required by the MRA, should furnish such information as is demanded of him to enable the MRA to comply with any request for the exchange of information under a tax treaty. The provisions of this sub-section apply also to banks.

       

    2. Power is also given to the MRA in section 64(9) of the Banking Act to enable the Director General to apply to a Judge in Chambers for an order of disclosure of any information relating to the transactions and accounts of any person by any financial institution.

       

    3. The Income Tax Act has been amended to allow the Minister to enter into an arrangement with the government of any foreign country for the exchange of information in respect of any person, including a non-resident of Mauritius. Tax Information Exchange Agreement (TIEAs) are already in force with 7 countries ( Australia, Denmark, Finland, Norway, States of Guernsey, Iceland and US) Negotiations have already started with a number of jurisdictions for the conclusion of a Tax Information Exchange Agreement.

       

    4. The Financial Services Act too has been amended to require GBC2 companies to submit to the FSC their annual financial summary as well as information on beneficial ownership.

       

    5. Most of the tax treaties in force in Mauritius provide for exchange of information in respect of residents of Mauritius as well as non-residents.

      A GBL2 company being a non-resident of Mauritius for treaty purposes is not entitled to benefits under a treaty but may be covered therein for information exchange purposes. 

       

    6. MRA and FSC have signed a Memorandum of Understanding which sets out the framework for effective exchange of information between the two Authorities. The MRA refers mostly to the FSC for information on GBC2 companies. Information in respect of GBC1 companies is usually required from their management companies.

       

    7. To ensure effective exchange of information with our treaty partners in a timely manner, the MRA has adopted a Procedure Manual where clear timelines have been set and will have, in all circumstances, to be strictly complied with.

       

    8. The procedure requires that a request be, in the first instance, made by the MRA to the taxpayer himself to furnish within a delay of 21 days the information in his possession. The delay may be extended to one month for the production of bank statements.

       

    9. Where a taxpayer fails to produce bank statements within the time limit, a request will be made directly to the bank. In the event the bank fails to comply within a period of 21 days, an application to the Judge in Chambers will be made for an order of disclosure, as provided in the Banking Act.

       

    10. We would like to assure all our stakeholders that the MRA does not entertain from treaty partners any information request characterised as fishing expedition. Only those requests for information which are foreseeably relevant or necessary, as provided in the relevant tax treaties, are given due consideration. Treaty partners are also required to use information exchanged with them only for tax purposes in accordance with the provisions of the treaty concerned.

       

    11. We rely on the understanding and co-operation of every person to provide within the specified timeline all information that may be requested by the MRA either directly or through the FSC so as to enable the MRA to attend to requests for exchange of information with treaty partners in a timely manner

       

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For any further information, please contact:

  • Mrs. M. Toofanee
    Tel: 207 6000 – Ext 2535
    E-mail mukhta.toofanee@mra.mu