MAURITIUS Law and Practice Contributed by: Fayaz Hajee Abdoula, Yashna Munbauhal and Yojna Beesoon, BLC Robert & Associates
deduction, include foreign tax charged on the income out of which the dividend was paid, such as withhold - ing tax at the source country level, corporation tax and any other tax on the dividends paid. Transparent entities are not taxed in Mauritius, and their associates are taxed on their share of income from those entities.
ture was incurred, deduct twice the amount of the expenditure, provided the research and develop - ment is carried out in Mauritius and provided it has not already claimed an annual allowance in respect of its deduction under Section 24 of the Income Tax Act 1995; and • if an entity incurs any qualifying expenditure that is not directly related to their existing trade or busi - ness, the tax authorities may allow a deduction of the expenditure in the income year in which the expenditure was incurred. “Qualifying expenditure” means any expenditure relating to research and development and includes expenditure incurred on innovation, improvement or development of a process, product or service and staff costs, consumable items, computer software directly used in research and development and sub - contracted research and development. Income of a company set up on or after 1 July 2017 and involved in innovation-driven activities for intel - lectual property assets developed in Mauritius, and income derived by a company from intellectual prop - erty assets developed in Mauritius on or after 10 June 2019, is tax-exempt for a period of eight income years, counting from the income year in which the company started its innovation-driven activities. This exemption shall be granted provided that the company satisfies such conditions as may be prescribed. This exemption shall be available only to a company that carries out research and development leading to the creation of a patent, copyrighted software or, only in relation to smaller companies, other intellectual property that is similar to an invention that could be patented. 2.3 Special Incentives The Partial Exemption Regime (see 1.4 Tax Rates ) applies to all entities, including entities holding a glob - al business licence, provided they fulfil the prescribed conditions. Some other special incentives as provided under the Income Tax Act 1995 include the following:
2. Corporate Tax Regime 2.1 Taxable Profits
Under the Income Tax Act 1995, income tax is levied on the chargeable income of an incorporated busi - ness. This refers to the net income of the entity and is calculated as follows: chargeable income = gross income minus allowable deductions “Gross Income” refers to all income derived by an entity other than income that is exempt from income tax under the Income Tax Act 1995. “Allowable deduc - tions” are those expenditures, losses or allowances that are classified as deductible under the Income Tax Act 1995. Taxable profits are generally based on “accounting profits”, using the International Financial Reporting Standards (IFRS) as the accounting standard. The income tax system in Mauritius operates on an accrual basis. However, an entity (excluding any entity holding a global business licence and non-resident sociétés ) that has an annual turnover not exceeding MUR10 million (ie, a small enterprise) may generally apply to the tax authorities for the net income of its business to be computed on a cash basis instead of an accrual basis. 2.2 Technology Investments Special incentives relating to technology investments include the following: • if an entity incurs any qualifying expenditure direct - ly related to their existing trade or business, it may, in the income year in which the qualifying expendi -
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