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The taxable income of a person comprises the gross income from different sources such as business, property and investments less allowable deductions. The taxable income of an individual includes salaries and benefits derived from employment
No tax is levied on capital gains. However, profits made from sale of capital goods such as immovable properties on a regular basis may be held to be ordinary business income and hence taxable. Profits from the sale of securities and units are specifically exempt from tax.
Interest arising in Mauritius and paid to a foreign corporation is subject to tax at the corporate rate of 25% or at a lower treaty rates. Such interest is not subject to withholding tax but are accounted for under the self-assessment system. Interest paid to non-residents by Category 1 and Category 2 Global Business Companies is tax free. Mauritius Central bank left its benchmark repo rate unaltered at 4.4 percent at its March 2016 meeting, as present strategy position is viewed as accommodative to development and expansion is contained beneath 3 percent. Be that as it may, policymakers considered option financing cost situations, with two individuals voting in favor of facilitating. Loan fee in Mauritius arrived at the midpoint of 5.55 percent from 2006 until 2015, achieving an unequaled high of 9.25 percent in June of 2007 and a record low of 4.65 percent in June of 2013. Loan cost in Mauritius is accounted for by the Bank of Mauritius.
Various type of income are exempt from income tax, including:
• Income derived by a Freeport company.
• Income derived by the registered owner of a foreign vessel.
• Income derived by the registered owner of a local vessel registered in Mauritius (provided the income is derived from deep sea international trade only).
• Capital gains on speculative or investment gains.
• A resident societe.
• Dividends received and paid by a tax incentive company.
• Interests payable on accounts held by qualified corporate (offshore).
• Interest payable on specific government securities.
• Royalties payable to a non-resident by a qualified company trust or bank.
Capital allowances are based on expenditure actually incurred, i.e. after deducting any subsidies received or exchange gains on foreign loans to purchase plant and machinery exchange losses on foreign loans are added to the capital cost of the plant and machinery. Annual allowances are allowed on capital expenditure relating to acquisition of plant and machinery, construction or extension of industrial premises including hotels, agricultural improvement on agricultural land and scientific research.
In general, the taxable income of a branch of a foreign company is :imputed in the same way as that of a resident company. However, a branch may not claim a deduction for interest and royalties paid to its foreign head office. Payments of interest and royalties by a Mauritian subsidiary to its foreign parent, on the other hand, are deductible, although the payments will constitute Mauritian source income subject to Mauritian income tax in the hands of the parent. A branch may deduct management expenses changed to it by a foreign head office provided the charge is reasonable having regard to the nature and extent of the management services rendered.