Tax reform in the Global Business sector in Mauritius
Tax reform in the Global Business sector in Mauritius
The Finance Bill 2018 was released on 13 July 2018 and covers measures announced in the Budget 2018-2019. It contains several tax measures that affect the Global Business sector in Mauritius as follows:
- Category 1 Global Business Licence
- Category 2 Global Business Licence
- Introduction of the Authorised Company
Category 1 Global Business Licence
- The Category 1 Global Business Licence (“GBC1”) will be renamed as Global Business Licence (“GBL”)
- Effective from the 1st January 2019, the Deemed Foreign Tax Credit (“DFTC”) regime available to GBC1 companies will be abolished and GBL companies will thereafter be taxed at the rate of 15%
- Introduction of a Partial Exemption Regime
- 80% of the following income streams will be exempted from tax:
- Foreign dividend (subject to such an amount not being treated as an allowable deduction in source country)
- Foreign source interest income
- Profit attributable to a permanent establishment of a resident company in a foreign country
- Foreign source income derived by a Collective Investment Scheme (“CIS”), Closed End Fund, CIS manager, CIS administrator, investment adviser or asset manager licensed or approved by the Financial Services Commission (“FSC”)
- Income derived by companies engaged in ship and aircraft leasing
- 80% of the following income streams will be exempted from tax:
- The 80% exemption is available upon meeting the pre-defined substance requirements as issued by the FSC. It would appear that the existing substance conditions will be further enhanced and we await further guidelines in this regard
- Existing GBC1 companies, where licenses were issued on or before 16 October 2017, will be grandfathered until 30 June 2021. Licenses issued after 16 October 2017 will be grandfathered until 31 December 2018. The current system of DFTC will continue to apply until the relevant grandfathering dates
Category 2 Global Business Licence
- Effective from the 1st January 2019, the Category 2 Global Business Licence (“GBC2”) will be abolished
- Existing GBC2 companies, where licenses were issued on or before 16 October 2017, will be grandfathered until 30 June 2021. Licenses issued after 16 October 2017 will be grandfathered until 31 December 2018
- After 31 December 2018 or 30 June 2021 as applicable, GBC2 licences will lapsed and companies will need to comply with the prescribed requirements of the GBL as issued by the FSC
Introduction of the Authorised Company
- Companies, conducting business and having their place of effective management outside of Mauritius, will be required to apply for an authorisation from the FSC to be registered as an Authorised Company
- An Authorised Company is treated as a non-resident for tax purposes in Mauritius
- An Authorised Company is required to file a return of income to the Mauritius Revenue Authority within 6 months of its year end
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