Overview of Taxes
The taxes administered by MRA are all on a self-assessment system. Under that system, persons liable to pay the relevant tax or duty have to submit declarations at the end of specified periods and pay the tax, if any in accordance with the declarations. Where the Director-General is not satisfied with the declaration or has reason to believe that a person liable to tax has not submitted a declaration, the cases are selected for audit or investigation and appropriate action are taken in accordance with the relevant legislation.
Income Tax is governed by the Income Tax Act 1995 and the Income Tax Regulations 1996 .
- Who is liable to Income Tax in Mauritius?
A person resident in Mauritius is liable to tax on the worldwide income derived by him.
A non-resident is liable to tax on income derived from sources in Mauritius
- What types of income are chargeable to tax?
Pay As You Earn (PAYE) System concerns salary earners, and covers salaries, wages, pensions and other income related to employment.
Business Income (CPS)
Current Payment System (CPS) concerns self-employed persons with income derived from trade, business, profession and rent. Is also included share of income from société and succession deriving income from trade, business and rent.
Other Income (Income NOT falling under PAYE and CPS)
Income such as interest, royalty, foreign dividends, charges, annuity.
Companies (including Trusts and Unit Trust Schemes)
Corporate Taxation :
Income such as business profits, interest, royalty, foreign dividends and rent.
- Exempt bodies of persons
Any bodies of persons specified in Part 1 of the Second Schedule is exempt from Income Tax
- Exempt income
Details of exempt income are as indicated below:
Types of income
Exempt income listed in
Sub-Part A to the Second Schedule to the Income Tax Act
Dividends, Interest and Royalty
Sub-Part B to the Second Schedule to the Income Tax Act
Sub-Part C to the Second Schedule to the Income Tax Act
- Business income
The term "business" is defined as including trade, manufacture, profession and undertaking.
"Trade" means any trade, adventure or concern in the nature of a trade.
By virtue of Section 10(3) of the Income Tax Act, gross income derived from a business shall include:
- any sum or benefit, in money or money's worth, derived from the carrying on or carrying out of any undertaking or scheme entered into or devised for the purpose of making a profit, irrespective of the time at which the undertaking or scheme was entered into or devised;
- any sum or benefit derived from the extraction, removal or sale of any mineral, tree or wood;
- any sum or benefit, in money or money's worth, derived from the sale of any immovable property or interest in immovable property, where the property was acquired in the course of a business the main purpose of which is the acquisition and sale of immovable property;
- any increase in the value of trading stock on hand at the time of transfer by sale or otherwise of a business or on the reconstruction of a company; and
- any subsidy derived in the carrying on of a business."
- General rules for deduction of expenses
Any expenditure or loss to the extent to which it is wholly and exclusively incurred in the production of gross income of the business is deductible from the gross income.
- Unauthorised deductions
The following deductions are not allowable:
- any investment, expenditure or loss to the extent to which it is capital or of a capital nature;
- any expenditure or loss to the extent to which it is incurred in the production of income which is exempt income;
- any reserve or provision of any kind;
- any expenditure or loss recoverable under a contract of insurance or of indemnity;
- any expenditure incurred in providing business entertainment or any gift;
- income tax or foreign tax;
- any expenditure or loss to the extent to which it is of a private or domestic nature.
- Annual Allowances
The provisions for annual allowances are found in Section 24 of the Income Tax Act.
The rates of annual allowance for capital expenditure qualifying for annual allowances are found in the Fourth Schedule to Income Tax Regulations 1996.
Losses may be set off against net income other than emoluments subject to the following:
Losses incurred in an income year may be carried forward to be set-off against net income of the following 5 income years only.
The time limit of 5 years is not applicable for the carry forward of any amount of loss that is attributable to annual allowance claimed in respect of capital expenditure incurred on or after 1 July 2006
- Presumptive Tax System
A small enterprise may, on or before the due date for the filing of its return of income, elect to pay a presumptive tax at the rate of 1% of its gross inocme. Where a small enterprise has made a election to pay presumptive tax, it shall not be entitled to claim any deduction, Income Exemption Threshold (IET), relief or allowance.
Small Enterprise means a person:
- Who is engaged in the following activities:
- Agriculture, forestry and fishing
- Manufacturing excluding restaurants
- Wholesale of foods
- Retail of goods, including sale of food to be consumed off-premises.
- Whose gross income in an income year does not exceed Rs. 10 million rupees; and
- Whose gross income from other sources, other than those specified above, does not exceed Rs. 400,000.
- Who is engaged in the following activities:
Value Added Tax (VAT)
The law relating to VAT is contained in:
- the Value Added Tax Act 1998 and
- the Value Added Tax Regulations 1998,
as subsequently amended.
- What is Value Added Tax?
Value Added Tax (VAT) is a tax on goods and services. It is chargeable on all taxable supplies of goods and services made in Mauritius by a taxable person in the course or furtherance of any business carried on by him. VAT is also payable on the importation of goods into Mauritius, irrespective of whether the importer is a taxable person or not. The rate of VAT is 15% on the value of taxable supplies other than zero-rated supplies.