Income range | applicable tax rate

from MUR 390.001 to MUR 430,000 | 2%

from MUR 430.001 to MUR 470.000 | 4%

from MUR 470.001 to MUR 530.000 | 6%

from MUR 530.001 to MUR 590.000 | 8%

from MUR 590.001 to MUR 890.000 | 10%

from MUR 890.001 to MUR 1.190,000 | 12%

from MUR 1.190.001 to MUR 1.490.000 | 14%

from MUR 1.490.001 to MUR 1.890.000 | 16%

from MUR 1.890.001 to MUR 2.390.000 | 18%

over MUR 2.390.001 | 20%

applies to: | lump-sum deduction from basic gross wage or salary | Employee percentage eligible thereon | Employer percentage eligible thereon

Employees in a household (cooks, householders, drivers, etc.) | none | none | 3%

Employees with a monthly wage or salary of maximum MUR 50,000 | 1.5% | 1.5% | 3%

Employees with monthly wages or salary above MUR 50,000 | 3% | 3% | 6%

The island nation of Mauritius in the Indian Ocean is famous for its tropical nature. In fact, Mauritius can compete with its more distant neighbour, the Seychelles, in this respect. But what hardly anyone knows is that Mauritius is one of the most advanced states in Africa. This is certainly also due to the fact that taxes, law and administration have been set up in Mauritius on the British model. For this reason, the economy in Mauritius is also one of the most highly developed on the continent. Therefore, we are interested in what taxes the Republic of Mauritius levies. For at least some time the EU had put Mauritius on its list of uncooperative states and territories. But is Mauritius really a tax haven?

1st Taxation in Mauritius – Introduction

In Europe, one often looks at the rest of the world from a morally and culturally elevated position. The African continent in particular knows this view. But there are always exceptions that more than contradict the dusty cliché. We are setting the stage for such an example. Curtain on for an analysis of taxes in Mauritius.

2nd General about Mauritius

2.1 Geographical location and geology

The Republic of Mauritius is an island nation in the Southern Indian Ocean. It consists of several inhabited and uninhabited islands, whose main island is located in the immediate vicinity of the French overseas department of Réunion. Further west follows Madagascar and then the southeast coast of Africa. Thus, it is a tropical island in the southern hemisphere. And like many others, this island group is founded on volcanism. But also the numerous coral reefs that line these ancient volcanoes and protect a little from the eternal surf, have their share of the geological history of the islands.

2.2 Mauritius – world famous for its extinct bird

Mauritius is even better known for a strange bird that also adorns the state coat of arms, the dodo. Unlike many other islands in the vast oceans, Mauritius is one of the few exceptions that were discovered and settled only in historical times. Apart from a few flying foxes, no other mammals had got lost in this remote corner of the world until the arrival of the first humans, so that the turkey-sized birds knew no predators and thus developed into pure, flightless ground inhabitants.

When the first Europeans reached the island in the 16th century, they found that the nutritious feather cattle, which showed no fear and flight reflexes, was the ideal provisions for their further sea voyages. By 1690, the last dodo had already been eaten. But a large part of the disappearance of the bird was certainly also the mammals introduced by humans, especially rats and monkeys.

In addition to the dodo, Mauritius is also home to many other endemic species of flora and fauna. This also includes ebony trees, which were the first export goods of the new settlers in the early days of settlement. In order to cut down and transport these trees, slaves from Africa were brought to the island. These were also needed later on the sugar cane plantations.

2.3. History of Mauritius

2.3.1. First discovery and settlement

Although the first explorers may be Arabs and possibly Malays, the islands remained uninhabited for 500 years. In any case, the first Europeans who left their footprint in the damp beach sand of Mauritius around 1500 a.D. were Portuguese. They had not yet sought economic use of their discovery. About a hundred years later, Dutch people followed, who made a first attempt at settlement, but after a few decades failed and disappeared again. Until French colonists arrived on the island from 1715 onwards, the region remained a retreat for pirates who also appreciated the culinary benefits of the dodos (rather that of their eggs, the birds themselves were not said to have been palate delight).

Until then, in the course of the Napoleonic wars in Europe, the English underlined their interest in the islands with the power of their navy, hardly a century passed. In any case, it was agreed that La Réunion remained French while the remaining islands were incorporated into the British Empire.

2.3.2. British colonial period

The British also continued to grow slave-based sugarcane in Mauritius. But the time of slavery was short. The abolition of slavery in 1834 led to a shortage of labor. Therefore, it was decided instead to recruit contract workers from India (as in Trinidad and Tobago). For this reason, today’s Mauritius society is based on a colourful mixture of ethnic groups, many of whom come from different regions of India. But even the old upper class, which remained firmly anchored in the French cultural circle even after the takeover of the region by the British, still plays an important social and cultural role in our time.

2.3.3. Mauritius becomes independent

So remotely two world wars and many more crises sometimes passed without lasting impression on Mauritius. Therefore, we can program our time machine to 1968 to come to the time when Mauritius should be released into independence. To this end, a modern constitution was introduced, which included human rights and universal suffrage. In fact, the political system in Mauritius corresponds to that which has emerged in Britain since the Middle Ages and today can be characterized as a stable, representative democracy. This security, coupled with a balanced policy – including in the field of taxation – has given Mauritius its generally comparatively high standard of living; It is one of the highest in Africa.

General information on the tax regime in Mauritius

3.1. Tax liability and scope of taxation when determining taxes in Mauritius

Mauritius in principle levies taxes according to the world income principle. However, foreign income is taxed only if it is paid out in Mauritius.

In addition, all domestic income is subject to limited taxation. However, there are also special regulations, such as a withholding tax on certain income. In addition, any double taxation agreements (DTAs) are relevant. Among other things, there is a DTA with Germany and, unsurprisingly, with France and Monaco as well as Great Britain, but none with Austria or Switzerland. The applicable DTA regulates the amount of a possible withholding tax in Mauritius.

Furthermore, any activity carried out in Mauritius in connection with employment is to be regarded as taxable within the country, whether the remuneration is at home or abroad.

The tax liability of natural persons in Mauritius is based on three criteria. Either you stay in the country for at least 183 days within a year, or you stay there during the year of assessment and in the previous two, also added together, for at least 270 days, or you have a permanent residence in Mauritius. But unlike in Germany, in the latter case you are exempt from tax liability if you use a residence abroad instead.

Legal persons are subject to taxation in Mauritius if they either have their registered office in Mauritius or their management takes place from Mauritius. If none of the above conditions is met, all or part of the transactions and contracts executed in Mauritius will remain taxable in the country. This requires registration with the Financial Services Commission (FSC). Special regulations still exist for operating sites in Mauritius, but these can vary depending on the DBA.

Taxes in Mauritius: assessment, tax returns and collection procedures

The period from 1 July to 30 June of the following year is required for regular taxation. This applies to all income taxes. However, undertakings may choose different marketing years provided that they cover a fixed period of 12 months.

You are obliged to submit a tax return if you have a net income of at least MUR 390,000 (about EUR 7.614); MUR 51.22 corresponds to approximately EUR 1) or has a gross income of MUR 2 million or income that was subject to withholding taxation. In the latter case, one must also count income that corresponds to the wage tax there. In addition, certain incomes are taxable anyway, so you have to submit a tax return for this too. Anyone who has also once submitted a tax return to the tax office is automatically obliged to do so in the following years. However, the tax authority may waive this repetition obligation.

Deadline for filing income tax returns is September 30 after the assessment period. However, a period of six months is available to submit the corporate tax return. Upon submission of the tax returns, taxes are also due. For self-employed persons (including real estate landlords), a tax advance payment based on quarterly profits applies. The rate of advance payment is a flat rate of 15 %. For the first quarter, the advance tax payment is due by the end of June. The second quarter, on the other hand, is handled by regular income tax collection; There is therefore no advance payment. Tax advances for the third quarter are to be paid by the end of the year. And for the fourth quarter, there is a deadline of March 31 of the following year. Compensation by back payment of tax or refund is made by way of the general assessment.

A co-disposition of spouses, and thus a splitting of spouses, is unknown in Mauritius. Each partner thus fills out their own tax declaration. For dependent children, they can only set a tax deduction once. This deduction option, which we will discuss in more detail in the case of income tax, is permitted for a maximum of four children.

4th Tax in Mauritius

4.1. Income tax

4.1.1. Income tax rates

Natural persons are entitled to an annual basic allowance of MUR 390,000 in Mauritius. In addition, a linearly increasing tax rate applies, which is subject to the following gradations:

4.1.2. Child allowances

The taxable income is determined by deducting certain reliefs. This includes in particular a child allowance, to which we already referred in the previous chapter. Thus, one parent (only one of the two) can set MUR 110,000 for the first child, MUR 80,000 for the second, MUR 85,000 for the third and MUR 80,000 for the fourth. No further allowance is provided beyond the fourth child. For children studying at a university, there is an additional MUR 500,000. However, a number of conditions must be observed.

4.1.3. Determination of taxable income

In principle, all income generated in connection with an employment relationship is covered by income tax. This also affects pensions, severance payments, gifts or bonuses, to name just a few examples. Exceptions are reimbursements for travel received by an employee in the course of his employment, provided that these are no more than 6 % of the annual basic salary or wage.

Special expenses for health care contributions in Mauritius are also tax deductible. An amount of maximum MUR 25,000 is available per person. Maintenance children are also considered. For the first child you can set an additional MUR 25,000, for the second, third and fourth, however, MUR 20,000 each. Every other child is also disregarded in this context.

For the promotion of homes, Mauritius allows the deduction of interest costs on certain loans granted against a mortgage when determining taxable income. This applies equally to the construction of new properties as well as to the acquisition of existing ones. The amount of the deduction can be divided evenly between two spouses.

Mauritius does not tax capital income. In principle, interest, royalties and dividends remain tax-free. However, this also applies to other assets-related income. If, however, this gives the impression that the related activities have the character of a trade, the income in question will be subject to regular income taxation. In principle, foreign capital income is also exempt from capital gains taxation if it is obtained abroad. If, on the other hand, the payment takes place in Mauritius, or if the transaction has been concluded in Mauritius, the income from this is exceptionally taxable. However, taxes possibly paid abroad on these incomes are credited in Mauritius and thus avoid double taxation.

4.1.4. Contributions to general social security and to the national pension fund

Taxpayers in employment relationships who are not public servants and self-employed persons are obliged to pay a social contribution (Contribution Sociale Généralisée, CSG for short). For employees, their employers are responsible for the transfer. Both employees and their employers pay a share of these contributions. They are staggered as follows:

For employees in the public sector, however, different regulations apply. But they are also insured under the CSG system.

4.2. How Entities Pay Taxes in Mauritius

4.2.1. Corporate tax in Mauritius

Entities pay a lump-sum corporate tax of 15% on their income earned in Mauritius. However, if they produce goods destined for export, the tax rate on the profit based on export will fall to 3%. A tax rate of 3 % can also be applied to companies operating in free ports and free zones. This also applies only to exports. The tax rate is to be applied to the taxable income from export. And this is calculated by multiplying the gross profit from export alone by the ratio of the company's total taxable income to its total gross income.

A trade tax or other local taxes as we know them in Germany are unknown in Mauritius.

4.2.2. Contributions to a Social Engagement Fund

Furthermore, entities in Mauritius are required to pay 2% of their taxable income in the previous year into a so-called Corporate Social Responsibility (CSR) Fund. Of this, 75% goes to the tax authority. The rest is used in accordance with the objectives defined for this purpose by the company. If funds remain, they also flow to the financial treasury. Objectives eligible for funding under this Fund are health promotion, including support for people with health disabilities, general education, support for families and social institutions, poverty reduction and similar programmes. What is excluded from funding, on the other hand, are projects that counteract social cohesion, national unity or public order, as well as the promotion of political, trade union or religious goals. Use for the promotion of own shareholders or employees is also excluded.

4.2.3. Taxation of international companies: Taxes beyond Mauritius

Although corporations are also taxed according to the world income principle, their own rules apply to profits obtained from abroad. Thus, corporations earning such foreign income can tax them under one of two options in Mauritius. Either they are tax exempt at 80% without deduction of foreign taxes, so that only 20% are taxed at the 15% rate. Or they have the taxes paid abroad counted against the regular taxation in Mauritius. This is therefore particularly advantageous where taxes abroad are at least as high as domestic taxes.

Mauritius strives to remove its image as a tax haven and has therefore adopted various global standards developed within the framework of the OECD to combat tax evasion and profit shifting in recent years. These include the regulations on GLoBE, which provide for a minimum taxation of international corporations with an annual profit of more than EUR 750 million, the introduction of regulations on country-by-country reporting and additional taxation. What is missing in the tax law of Mauritius, however, are fixed regulations regarding international transfer prices. However, this is irrelevant insofar as tax law is based on the arm's length principle anyway.

4.3. VAT in Mauritius

Sales tax in Mauritius is an all-phase tax. This means that all sales are affected, with intermediaries refunding previously paid taxes as input tax in Mauritius.

The general VAT rate in Mauritius is 15 %. By way of derogation, the following supplies and services in Mauritius are exempt from this tax: bread and various types of flour (except wheat flour), unprocessed fruit and vegetables, coffee, cocoa and tea, live animals (except poultry) intended for the production of foodstuffs, food preparations for children, medical services and specially specified devices for physically impaired persons, education and education services recognised by the State and a range of financial services. Further exceptions exist in connection with the importation of goods into the territory of the country, which otherwise may also only be transferred to consumers with VAT.

A distinction must be made between supplies and services which are taxable but to which a tax rate of 0 % applies. This includes all overseas accommodation and services, including wheat flour and bread, cooking oils and fats, sugar, milk and liquid dairy products (e.g. cream, yoghurt), fish from Mauritius, poultry, animal feed (except for small animals), fertilisers, a range of printed products, electricity, water and sanitation, kerosene and public passenger transport (domestic and foreign). Deliveries and services addressed to companies in the free ports and free zones are also subject to a 0 % turnover tax.

4.4. Other excise duties

In addition to VAT, special excise duties are payable on a number of goods. These include vehicles and petroleum-based fuels.

4.5. Property transfer tax in Mauritius

Taxes also apply in Mauritius to the transfer of real estate. The tax is 5 % on the acquisition value and is paid by the transferee. In addition, real estate transfer taxes also apply to the transfer of company shares if the assets of these companies include land. In this case, the tax is payable either on the value of the transferred shares or on the pro rata value of the immovable property included in it, with no right of choice, but always the lower tax is payable.

However, these taxes are waived in Mauritius if the transfer of such shareholdings takes place within a group. The same applies to mergers of companies in which the shareholders of the companies involved are identical.

In addition, property transfers between relatives of straight lines, in particular between parents and their children and children's children, remain tax-free.

4.6. Registration duty when acquiring real estate in Mauritius

Another tax that leads to a kind of tax with the acquisition of land in Mauritius is the registration tax. It amounts to 5 % of the property value and, unlike the property transfer tax in Mauritius, is paid solely by the buyer.

4.7 Stamp duty in Mauritius

Since the British legal system had a defining effect on the design of the tax law of Mauritius, it is hardly surprising that there is also a stamp duty there. In general, it is about the taxation of documents of all kinds. This plays an important role in the transfer of property rights. Depending on the type of documents, it is between MUR 15 and MUR 2000.

4.8. Taxes on the transfer of certain lease rights in Mauritius

In Mauritius you can lease state land. In a way, it is comparable to the German inheritance lease law. In any case, this lease right can be transferred in Mauritius. Since this right of lease also has a certain value, the transfer of lease rights to state land in Mauritius is subject to its own tax. It amounts to 20% of the value that would be paid among third parties for the acquisition of this lease right. However, the seller and the acquirer share these taxes so that each party has to pay 10 % of the value of the taxes.

4.9. no taxes on assets in Mauritius

Mauritius has neither an inheritance tax nor a gift tax. In addition, a property tax is also unknown in this country.

4.10. Tax incentives in Mauritius

Mauritius offers various tax incentives to convince companies to invest domestically. This includes, in particular, the privileged spending on research and development. Research and development costs, which are intended to benefit the company’s own business field, can be deducted twice and thus reduce profits considerably. However, on the one hand, there is the condition that the costs do not lead to a tax deduction elsewhere and on the other hand that the research or development work took place in Mauritius.

Mauritius also grants the aforementioned tax privilege for exporting goods.

Innovative companies founded after 2017 can also look forward to a tax-free period of eight years. Innovation is defined by the creation of intangible assets.

Independently, Mauritius also supports green projects with a tax waiver of eight years that operate air conditioning systems using oceanic deep water. In this case, the deduction of the double cost of the operation is also possible for tax purposes, but with a limitation of five consecutive years.

For desalination plants, there is also the option to double the initial cost. However, this applies only in the year of purchase.

5th Tax in Mauritius – Conclusion

Although Mauritius has the highest per capita wealth and, besides Seychelles, almost the highest per capita gross domestic product in Africa, the tax regime is relatively liberal from the point of view of taxpayers. It provides for tax relief for both low-income earners and middle class and high-income taxpayers, without forgoing taxes altogether. And yet the state tax revenue is sufficient for a remarkably well-functioning welfare state, which can finance both a public health system and school system, which even includes free study places, and a relatively well-developed public transport system.

This also makes Mauritius interesting for many foreign investors. The island is equally tempting as a destination for emigrants. Perpetual travelers also feel comfortable here. Good infrastructure combined with an affordable, upscale standard of living in safe conditions can only be offered by a few countries in the region. In addition, there is the location in the tropics and a charming nature right on your doorstep. Even the distance to Germany in terms of the different time zones is comparatively small; the difference is only two hours. This is also interesting for managing directors of German companies, because they can work largely synchronously with their employees in Germany from abroad. For anyone looking for an alternative to emigration to Dubai, this is quite a reasonable choice. However, the travel time is much longer. But who wants to leave Paradise?