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 Taxation - calculation of foreign Tax Credit: net amount of foreign income that has borne tax is grossed up at the foreign rate of tax.A company which has suffered a tax on its foreign source income is entitled to the following tax credits as per the ITA 1995:
• A credit for foreign income tax paid or its foreign service income.
• A sparing tax credit — a credit for tax deemed to have been paid.
• In the case of dividend income, an underlying tax credit, i.e. credit for tai paid on income out of which the dividends have been paid under certain conditions.

The foreign tax credits should not in thE aggregate exceed that of the Mauritius tax payable on such foreign source income.

The Income Tax (Foreign Tax Credit) Regulation 1996 (under the Income Tax Act 1995) allow for foreign tax credit on the foreign source income of a Mauritian resident. These regulations had been amended by the Income Tax Credit (Amendment Regulation) 1997 whereby the presumed amount of foreign tax was increased from 80% to 90% of the Mauritius tax chargeable. However, the Finance Act 2000 has once again amended the regulations bringing back the presumed foreign tax to 80% - this

Change has been effective since 1st July 2003. It is to be noted that such presumed foreign tax is available for qualified corporations.

In drafting the Foreign Tax Credit Regulations, the approach has been to be as generous as possible to the taxpayer with regard to foreign tax credit. Mauritius wishes to avoid international

double taxation and not to have such double taxation operating as a block to foreign investment. Thus, in number of matters, these Regulations are as generous or more generous than provisions found in the laws of other countries. The foreign tax credit is available for the amount of income actually received in Mauritius and is treated as a foreign tax which is of