The taxation of income of both companies and individuals is governed by the main tax legislation, the Income Tax Act 1995, and by income tax regulations promulgated from time to time by the Minister of Finance. Amendments to tax law are usually made annually following the Minister of Finance's Budget Speech.
Income Tax is charged on most classes of income accruing in, derived from, or received in Mauritius. The year of assessment runs from 1st July in any year to 30th June of the next year. Taxation in any year of assessment is normally levied on income derived from the preceding year except in the case of income from employment which is subject to deduction on an actual basis via the Pay As You Earn (PAYE) system and Current Payment System. Chargeable income is arrived at after adjusting for non-allowable deductions from gross income.
Mauritius runs a self-assessment taxation system. Residents of Mauritius are taxed on worldwide income, except those whose foreign source income is not remitted to Mauritius. A resident company is charged tax in respect of its worldwide income, regardless of whether the foreign source income is remitted or not to Mauritius.
A non-resident is taxed on their Mauritius-source income . A Resident is defined in the Income Tax Act as an individual who is normally domiciled in Mauritius unless permanent domicile is outside Mauritius, or has lived in Mauritius for a period of 183 days or more in an income year or has lived in Mauritius for an aggregate period of 270 days in an income year and the 2 preceding income years. A company is resident in Mauritius if it is incorporated in Mauritius or has its central management and control in Mauritius.
Mauritius offers a relatively low tax jurisdiction with an investor-friendly environment to encourage both local and foreign companies to set up a business in Mauritius.
Local companies in Mauritius enjoy a low corporate tax rate of 15%, and companies in the global business (formerly offshore) sector are also taxed at a corporate rate of 15% on business profits. However foreign tax credits are allowed to the full extent of the Mauritius tax for taxes paid at source. There is also a system of foreign tax credits of 80% that effectively reduces the income tax rate to 3% on the qualifying income of the company.