Double Taxation Avoidance Treaties
Tax Treaties in force or under negotiation
So far Mauritius has ratified twenty nine treaties and is party to a series of treaties under negotiation. The treaties currently in force are given in the table below. The treaty with India, which had underpinned the emergence of Mauritius as the dominant channel for FDI into India, came under attack from Indian tax authorities in 2002 as a result of alleged abuses by Indian-resident investors. However, after a series of high-profile court hearings, the status quo was restored.
Tax Treaty Benefits
Tax treaty benefits are only available to resident entities or persons. Accordingly, a resident entity must be liable to tax in Mauritius under its laws by reason of its domicile or residence. Mauritius provides a wide range of resident entities and hybrid structures including the Global Business Company, the Trust and the Société. A foreign company including the Global Business Company may benefit from the tax treaty network. It is also possible for Mauritian branch of a foreign company to access the tax treaties by satisfying the conditions of residence. These entities if wishing to avail of the benefits of a tax treaty must apply for a Tax Residence Certificate issued by the Commissioner of Income Tax in Mauritius.
Unilateral Relief
If a resident of Mauritius derives income from a foreign country that has not concluded a tax treaty with Mauritius and foreign income tax is paid on the income, that tax may be credited against Mauritian income tax. The credit is limited on a source-by-source basis to the lesser of the foreign tax paid on the income concerned and the Mauritian income tax payable on the same income. In the case of foreign source dividends, no credit relief if granted for foreign corporate income tax borne on the profits out of which the dividends are paid (underlying tax).
A summary of the features of the Double Taxation Avoidance Treaties
YEAR |
Country |
Tax Sparing Clause |
Dividends (max rate) |
Interests (max rate) |
Royalties (max rate) |
Perm Est |
Capital Gains |
||||
No |
Year Signed |
Entry into Force |
Portfolio |
Other |
Banks |
Other |
Min duration Activity (months) |
||||
1 |
1978 |
30/11/90 |
Germany |
No |
5%(a) |
15% |
Exempt |
(c) |
15% |
6 |
(d) (g) |
2 |
1981 |
17/10/82 |
France |
No |
5% (b) |
15% |
(e) |
(c) |
15% |
6 |
(d) |
3 |
1981 |
26/10/87 |
UK |
Yes |
10% (b) |
15% |
Exempt |
15% |
15% |
6 |
(d) |
4 |
1983 |
11/06/85 |
India |
Yes |
5% (b) |
15% |
Exempt |
15% |
15% |
9 |
(d) |
5 |
1992 |
28/08/92 |
Zimbabwe |
Yes |
10% (a) |
20% |
Exempt |
15% |
15% |
6 |
(d) (g) |
6 |
1992 |
21/12/92 |
Sweden (f) |
Yes |
5% (b) |
15% |
Exempt |
15% |
15% |
6 |
(d) (h) |
7 |
1993 |
17/08/93 |
Malaysia |
Yes |
5% (b) (j) |
15% (j) |
15% |
15% |
15% |
6 |
(d) |
8 |
1994 |
08/11/94 |
Swaziland |
Yes |
7.5% |
7.5% |
5% |
7.5% |
7.5% |
6 |
(d) |
9 |
1990 |
28/04/95 |
Italy |
No |
5% (a) (k) |
15% (k) |
(c) |
15% |
15% |
6 |
(d) |
10 |
1994 |
04/05/95 |
China |
Yes |
5% |
5% |
Exempt |
10% |
10% |
12 |
(d) (g) |
11 |
1994 |
01/07/95 |
Pakistan |
Yes |
10% |
10% |
10% |
10% |
12.5% |
6 |
(d) |
12 |
1994 |
04/12/95 |
Madagascar |
No |
5% |
10% |
10% |
10% |
5% |
6 |
(d) |
13 |
1995 |
07/06/96 |
Singapore |
Yes |
(e) |
(e) |
(e) |
(e) |
(e) |
9 |
(d) |
14 |
1995 |
01/07/96 |
Botswana |
Yes |
5% (a) |
10% |
12% |
12% |
12.5% |
6 |
(d) (h) |
15 |
1995 |
25/07/96 |
Namibia |
Yes |
5% (a) |
10% |
Exempt |
10% |
5% |
6 |
(d) |
16 |
1995 |
12/09/96 |
Luxembourg |
Yes |
5% (b) (i) |
10% (b) (i) |
(e) |
(e) |
(e) |
6 |
(d) |
17 |
1996 |
02/05/97 |
Sri Lanka |
Yes |
10% (b) |
15% |
10% |
10% |
10% |
6 |
(d) (g) |
18 |
1996 |
20/06/97 |
South Africa |
Yes |
5% (b) |
15% |
(e) |
(e) |
(e) |
9 |
(d) |
19 |
1996 |
12/01/98 |
Indonesia |
Yes |
5% (a)1 |
10% |
Exempt |
10% |
10% |
6 |
(d) |
20 |
1997 |
10/06/98 |
Thailand |
Yes |
10% |
10% |
10% |
15% |
5% (l), 15% |
6 |
(d) |
21 |
1998 |
20/07/98 |
Oman |
Yes |
(e) |
(e) |
(e) |
(e) |
(e) |
6 |
(d) |
22 |
1997 |
01/08/98 |
Kuwait |
Yes |
(e) |
(e) |
(e) (m) |
(e) (m) |
10% |
9 |
(d) |
23 |
1995 |
28/01/99 |
Belgium |
Yes |
5%(b) |
10% |
10% |
10% |
(e) |
6 |
(d) |
24 |
1997 |
08/04/99 |
Mozambique |
Yes |
8%(a), 10%(b)1 |
15% |
Exempt |
8% |
5% |
6 |
(d) |
25 |
1999 |
10/11/99 |
Nepal |
Yes |
5%(a)2, 10%(b) |
15% |
10% |
15% |
15%(l) |
6 |
(d) |
26 |
2000 |
12/06/00 |
Cyprus |
Yes |
Exempt |
Exempt |
Exempt |
Exempt |
Exempt |
Exempt |
(d) |
General Notes
Dividends, interests and royalties derived from Mauritius by Global Business entities are tax exempt. No capital gains.
Double taxation is eliminated by the credit method, i.e the taxpayer's country of residence will grant a credit for taxes paid in the source country.
When a resident of Mauritius is recipient of dividends from a company which is resident of the treaty country, the recipient is entitled to a tax credit which shall take into account the tax paid in the treaty country by the company paying the dividend in respect of the profits out of which the dividend is paid.
* Recipient is the beneficial owner of the dividends/interests/royalties. Such income is taxed in the recipient's country of residence but may also be taxed in source country according to the laws of that state.~ A resident of Mauritius receiving will be allowed a tax credit corresponding to the amount of tax levied in the treaty country # Services and activities including building site or a construction, installation or assembly project
Specific Notes
(a) Shareholding at least 25% |
(b) Shareholding at least 10% |
(a)1 Shareholding at least 20% |
(b)1 Shareholding less than 25%. |
(a)2 Shareholding at least 15% |
|
(a) |
|
Interest taxed in recipient's country of residence but may also be taxed in source country according to the laws of that state. |
(d) |
|
Gains from the alienation of property (movable & immovable) forming part of the business property of a permanent establishment may be taxed in the country where the permanent establishment is situated. Gains from alienation of ships or aircraft are taxable in the state in which the alienator is resident. |
(e) |
|
Dividends/Interests/Royalties are taxable only in the recipient's country of residence according to the laws of the state. |
(f) |
|
Treaty applicable only for Category 1 Global Business Companies. |
(g) |
|
Gains from the alienation of shares of a company may be taxed in the company's country of residence. |
(h) |
|
Gains from alienation of any property (inc. shares) derived by an individual holding "dual" residence are subject to taxation at any time during the next ten years following the date on which the individual has ceased to be a resident of the first state of which he was a resident. |
(i) |
|
Dividends derived by a company resident in Luxembourg from Mauritian sources are exempt from tax in Luxembourg provided that the Luxembourg company holds at least 10% of the shareholding of the Mauritian company and that the latter is subjected to tax of at least 15% in Mauritius. |
(j) |
|
Dividends paid by a company which is resident of Malaysia to a resident of Mauritius who is the beneficial owner are exempt from any tax in Malaysia which is chargeable on dividends. |
(k) |
|
Such tax shall be deemed to have been paid at an amount not exceeding 15% of the gross amount of the dividends. |
(l) |
|
In the case of copyright of literary, artistic or scientific work, excluding cinematographic films, tapes or discs for radio or television broadcasting. |
(m) |
|
In the case of interest paid being effectively connected with a permanent establishment, the beneficial owner of the interest is taxed at a maximum of 5%. |
Treaties awaiting Ratification |
Treaties awaiting signature |
Treaties being negotiated |
Russia |
Bangladesh |
Canada |