MAURITIUS Law and Practice Contributed by: Fayaz Hajee Abdoula, Yashna Munbauhal and Yojna Beesoon, BLC Robert & Associates
5.3 Capital Gains of Non-Residents There are no capital gains taxes in Mauritius. Any gains realised by non-residents on the disposal of shares in local corporations are not liable to tax in Mauritius. However, where the nature of a transaction is characterised by trading activity, any gains derived from that transaction may be assessed and taxed as income. 5.4 Tax Implications of Change of Control There is no applicable information in this jurisdiction. 5.5 Formula-Based Income Attribution Formulas are not used to determine the income of foreign-owned local affiliates selling goods or provid - ing services. 5.6 Deductibility of Intra-Group Management and Administrative Charges For the fees to qualify as an allowable deduction for the local affiliate, the expenses must have been incurred exclusively in the production of gross income of the local affiliate, and the transaction must have been conducted on an arm’s length basis. 5.7 Restraints on Related-Party Borrowing There are no constraints imposed on any related-party borrowing. However, the related-party borrowing must be conducted on an arm’s length basis. 6. Taxation of Foreign Income of Local Corporations 6.1 Foreign Income Exemptions The foreign income of local corporations is taxed at the rate of 15%, subject to applicable exemptions. Local corporations may benefit from the partial exemption regime, or they may claim foreign tax credit on the foreign income by giving evidence of the foreign tax suffered to the authorities. 6.2 Non-Deductible Local Expenses There is no applicable information in this jurisdiction. 6.3 Dividends From Foreign Subsidiaries Dividends are taxed at the rate of 15%, but local corporations may benefit from the partial exemption
regime (if the local corporation meets the prescribed substance requirements); alternatively, they may claim foreign tax credit on the foreign income by giving evi - dence of the foreign tax suffered to the authorities. 6.4 Taxation of Intangibles Developed by Local Corporations There is no applicable information in this jurisdiction. 6.5 Controlled Foreign Corporation-Type Rules Mauritius introduced controlled foreign company (CFC) rules in 2019, and these rules apply to resident companies carrying on business through a CFC; the non-distributed income of the CFC arises from non- genuine arrangements put in place for the principal purpose of obtaining a tax benefit. This income is deemed to form part of the chargeable income of the resident company. A non-genuine arrangement is an arrangement whereby a CFC would not own the assets or would not have taken on the risks that generate all, or part, of its income if it were not controlled by a company where the significant people functions that are rele - vant to those assets and risks are carried out and are instrumental in generating the controlled company’s income. A CFC is a company that is not resident in Mauritius in which more than 50% of its total participation rights are held, directly or indirectly, by the resident company or together with its associated enterprises. The defini - tion of a CFC includes a permanent establishment of the resident company. The CFC rules do not apply to a CFC where, in an income year: • accounting profits are not more than EUR750,000, and non-trading income is not more than EUR75,000; • accounting profits amount to less than 10% of its operating costs for the tax period; or • the tax rate in the country of residence of the CFC is more than 50% of the tax rate in Mauritius.
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