The corporate tax framework in Mauritius
Corporate tax is the cornerstone of the Mauritian tax system. Governed by the Income Tax Act, it applies to all companies incorporated or operating in Mauritius. The standard rate of 15% — with reduced rates applying to certain activities (3% for the export of goods and Freeport operators, 5% for banks up to MUR 1.5 billion) — is one of the most competitive in the world, and the Partial Exemption System makes it even more attractive for international structures.
Mauritius has managed to create a tax regime that combines competitiveness with international compliance. The system has been validated by the OECD under the BEPS (Base Erosion and Profit Shifting) project and does not appear on any European Union blacklist. This recognition guarantees the durability and credibility of tax structures established in Mauritius.
Tax rates: the key distinction between company types
Although all companies are subject to the same 15% nominal rate, the effective tax burden varies considerably depending on the type of company, the nature of its income and whether the Partial Exemption System applies:
| Company type | Nominal rate | Effective rate | Conditions of application |
|---|---|---|---|
| Domestic Company | 15% | 15% | No specific exemption; taxation on worldwide profits |
| GBC (eligible foreign income) | 15% | ~3% | 80% partial exemption + economic substance required |
| GBC (locally sourced income) | 15% | 15% | No exemption on Mauritian-source income |
| Authorised Company | 0% | 0% | Non-resident for tax purposes, taxed only on Mauritius-source income; no access to DTAs; must still file an annual return and financial summary with the MRA |
| Manufacturing SME (first 8 years) | 0% | 0% | Corporate tax exemption for 8 years for new manufacturing SMEs |
The Partial Exemption System: the central mechanism
The central mechanism that makes Mauritian taxation so attractive for GBCs is the Partial Exemption System, introduced in 2019 to replace the former deemed Foreign Tax Credit system. This new system complies with the recommendations of the OECD's BEPS project and was specifically designed to withstand international challenges.
How it works
The system grants an 80% exemption on certain categories of foreign-source income. In practice, only 20% of eligible income is included in the taxable base, then subject to the 15% rate. The calculation is as follows:
| Item | Calculation | Amount |
|---|---|---|
| Eligible foreign-source income | — | MUR 1,000,000 |
| Partial exemption (80%) | 1,000,000 × 80% | - MUR 800,000 |
| Residual taxable base | 1,000,000 × 20% | MUR 200,000 |
| Tax due (15%) | 200,000 × 15% | MUR 30,000 |
| Effective tax rate | 30,000 / 1,000,000 | 3% |
The Partial Exemption System applies automatically to eligible income, with no need for a prior application or administrative approval. The company must nonetheless satisfy the economic substance requirements and maintain appropriate documentation.
Categories of income eligible for the 80% exemption
The exemption applies to the following categories of income, provided they arise from sources located outside Mauritius:
- Foreign-source dividends: dividends received from subsidiaries or holdings held abroad
- Foreign-source interest: interest received on loans granted to non-resident entities
- Profits from the export of services: income from services rendered to clients located outside Mauritius (consulting, IT, management, etc.)
- Royalties and licence fees: income from intellectual property exploited outside Mauritius
- Income from aircraft and ship leasing: financing activities relating to international mobile assets
- Income of reinsurance companies: net premiums received from foreign sources
- Profits from fund management: management fees charged to offshore investment funds
- Income of international trading companies: profits from international trading transactions
Economic substance requirements
Since Mauritius aligned itself with BEPS standards, GBCs must demonstrate genuine economic substance in Mauritius in order to benefit from the partial exemption and from the advantages of tax treaties. These requirements are a crucial point in any international tax planning involving Mauritius.
Required substance criteria
| Criterion | Minimum requirement | Recommendation for enhanced compliance |
|---|---|---|
| Direction and control | At least 2 resident directors in Mauritius | Board of directors meeting regularly in Mauritius, with detailed minutes |
| Qualified staff | Employees in Mauritius (number depending on activity) | Staffing consistent with the nature and volume of the declared activity |
| Physical premises | Registered offices in Mauritius | Premises proportionate to the activity, with appropriate equipment |
| Operating expenditure | Expenditure incurred in Mauritius | Minimum proportionate to turnover and margin achieved |
| Strategic decisions | Taken in Mauritius | Full documentation of investment and commercial decisions taken locally |
| Bank account | Bank account opened in Mauritius | Operating accounts with genuine financial flows passing through Mauritius |
Consequences of non-compliance
Failure to meet the substance requirements can lead to serious consequences:
- Loss of the partial exemption and taxation at the full 15% rate on all income
- Inability to benefit from double taxation treaties, as the Tax Residence Certificate (TRC) may be refused
- Administrative penalties imposed by the FSC, potentially up to withdrawal of the GBC licence
- Recharacterisation by foreign tax authorities, with application of the shareholder's country's CFC (Controlled Foreign Company) rules
The Financial Services Commission (FSC) carries out regular checks on the substance of GBCs. Companies must be able to demonstrate, at all times, that their effective management is indeed located in Mauritius and that their activities are genuinely carried out there.
Taxable base and deductions
Determination of taxable profit
Taxable profit is determined according to international accounting standards (IFRS), with certain tax adjustments provided for by the Income Tax Act. The main allowable deductions include:
- Operating expenses: salaries, rent, supplies, professional services, management company fees
- Depreciation: rates set by law — industrial buildings: 5%, IT equipment: 50%, other equipment: 25-35%, vehicles: 20%
- Loan interest: deductible subject to thin capitalisation rules (debt-to-equity ratio capped at 3:1 for GBCs)
- Provisions for doubtful debts: deductible under strict documentation conditions
- Research and development expenses: enhanced deduction of 200% for qualifying R&D expenditure
- Donations to charitable organisations: deductible up to a limit of 5% of taxable profit
Non-deductible expenses
Certain categories of expenses are not deductible from taxable profit:
- Personal expenses of directors
- Fines, penalties and late-payment interest paid to the MRA or other authorities
- Unjustified or excessive provisions
- Dividend distributions (which do not constitute an operating expense)
- Expenses without supporting documentation (except for a de minimis allowance)
- Expenses relating to exempt income
The CSR (Corporate Social Responsibility) levy
Companies with turnover exceeding MUR 50 million (approximately EUR 1 million) are subject to the CSR levy at a rate of 2% of their taxable profits for the previous period. This levy is allocated to funding social programmes approved by the government.
Allocation of the CSR Levy
Companies may allocate 50% of the amount (i.e. 1% of profits) to CSR programmes of their choice, subject to approval by the National CSR Foundation. The remaining 50% is paid directly to the Mauritius Revenue Authority (MRA), which redistributes it to priority social programmes.
Payment and filing of tax
Tax calendar
| Obligation | Deadline | Conditions |
|---|---|---|
| Close of the accounting period | At the company's choice (generally 30 June or 31 December) | MRA approval required for any change of date |
| Quarterly advance payments (APS) | 3, 6, 9 and 12 months after the start of the accounting period | Mandatory for companies with turnover > MUR 10 million |
| Annual Return of Income | 6 months after the close of the accounting period | All companies, via the MRA's e-Filing portal |
| Audited financial statements | 6 months after the close of the period | Mandatory for all GBCs (audit by a licensed auditor) |
| Payment of the tax balance | No later than the date the return is filed | After deduction of advance payments already made |
Advance Payment System (APS)
Companies with turnover exceeding MUR 10 million must make quarterly advance payments. Each advance payment corresponds to 25% of the tax estimated for the current year. Key points:
- The estimate may be based on the previous year's tax or on a reasonable estimate of the current year's tax
- In the event of an underestimation of more than 25%, a penalty of 5% applies to the shortfall
- Payments are made via the MRA's electronic portal
- Newly incorporated GBCs may be exempted from the APS for their first accounting period
Treatment of tax losses
The loss carry-forward regime in Mauritius provides for the following rules:
- Carry-forward: tax losses may be carried forward for a period of 5 years and set off against the taxable profits of subsequent accounting periods
- No carry-back: unlike certain jurisdictions (such as the United Kingdom or the United States), Mauritius does not allow losses to be set off against the profits of prior accounting periods
- Separation by income category: losses from one category of income cannot offset profits from another category
- Change of shareholding: a change of more than 50% in shareholding during a period may result in the loss of the right to carry losses forward, unless the company can demonstrate continuity of its activity
Transfer pricing
Mauritius has adopted transfer pricing rules in line with the OECD Transfer Pricing Guidelines. Transactions between related parties must be carried out on an arm's length basis.
Documentation obligations
Companies with turnover exceeding MUR 200 million, or that carry out transactions with related parties exceeding MUR 100 million, are required to prepare transfer pricing documentation comprising:
- Master File: the group's main file, describing its organisation, business strategy and transfer pricing policies
- Local File: the Mauritian company's local file, detailing intra-group transactions and justifying their compliance with the arm's length principle
- Country-by-Country Report (CbCR): for groups with consolidated turnover exceeding EUR 750 million, a report of income, taxes and activities in each country
The MRA has strengthened its transfer pricing audit capabilities since 2020. Transfer pricing adjustments can lead to significant reassessments, with late-payment interest and penalties. Robust documentation is the best way to prevent disputes.
Specific tax incentives
Beyond the general regime, Mauritius offers targeted tax incentives to stimulate certain strategic sectors of its economy:
| Sector / activity | Incentive | Duration / conditions |
|---|---|---|
| Freeport zone | Exemption from customs duty and VAT on imports | Unlimited — transhipment, storage and re-export activities |
| Innovative businesses (R&D) | Enhanced deduction of 200% on qualifying R&D expenditure | Annual — R&D expenditure incurred locally |
| Manufacturing SMEs | Corporate tax exemption for 8 years | 8 years — new manufacturing-sector SMEs |
| Fintech and innovation (Regulatory Sandbox) | Corporate tax exemption for 8 years | 8 years — FSC Sandbox licences |
| Film and audiovisual | Tax credit of 30-40% on local expenditure | Per project — audiovisual productions in Mauritius |
| Agro-industry | Corporate tax exemption for 8 years | 8 years — new agro-industrial businesses |
| Smart Cities | Corporate tax exemption for 8 years, land-related exemptions | 8 years — businesses operating in approved Smart Cities |
| Green Buildings | Accelerated depreciation over 3 years | Buildings certified to environmental standards |
Regional comparison of corporate tax
| Country | Nominal corporate tax rate | Effective corporate tax (international structures) | Capital gains | Dividend WHT |
|---|---|---|---|---|
| Mauritius | 15% | ~3% | 0% | 0% |
| France | 25% | 25% | 25% (or 0% under the parent-subsidiary regime) | 12.8-30% |
| South Africa | 27% | 27% | 18% | 20% |
| India | 22-30% | 22-30% | 10-20% | 10-20% |
| Kenya | 30% | 30% | 5% | 15% |
| Madagascar | 20% | 20% | 20% | 10% |
| Senegal | 30% | 30% | Variable | 10% |
Mauritius's comparative advantage is clear: an effective rate of 3% for GBCs, combined with the total absence of capital gains tax and of withholding tax on dividends, places the jurisdiction as a regional leader for international investment structures, particularly into Africa.
In summary
Mauritius's corporate tax regime offers a competitive, transparent framework that complies with international standards. The 3% effective rate for GBCs, combined with the absence of taxation on capital gains and dividends, makes Mauritius a jurisdiction of first choice for international investment structures. The key to success lies in rigorous compliance with substance requirements and in appropriate documentation of all transactions. Simulate your taxation to estimate your effective tax burden.
Disclaimer: This tax information is provided for indicative purposes only and does not constitute personalised tax advice. Rates and conditions are subject to change. Consult a qualified tax adviser for an analysis tailored to your situation.