Mauritius is a strategic Global Business center situated in the Indian Ocean region. It is one of the most open and financially sound economies in sub-Saharan Africa. Mauritius is located between Asia and Africa, and the success of its economy is largely a result of its political and socio-economic stability, coupled with good governance and a wide range of incentives to boost investment.
Mauritius is recognized as being an excellent place for doing business. The country’s adoption of international best business practices and sustainable development policies has been acknowledged by international agencies such as the Organization for Economic Cooperation and Development (OECD), the Financial Action Task Force (FATF) and the World Bank (WB).
The country has embarked upon a new reform program underpinned by an open economic philosophy. The objective is to boost its appeal to international investors and make Mauritius the financial hub of the African region and an ideal springboard for investment and doing business in Africa, Middle East and Asia.
The most prominent factor for the setting up of an entity in Mauritius is, because of the concessional tax rate. In fact the corporate tax rate of 15% but its effective tax rate on foreign income is reduced to a maximum of 3% after allowance of foreign tax credit. The rate can be further reduced depending on the actual foreign tax credit. It can also benefit from the double taxation treaty network of Mauritius, currently standing at 33, thereby reducing or eliminating withholding tax on dividend, interest, royalty and capital gains tax.
However, to obtain the utmost benefit of the double taxation treaty, the entity needs a Tax Residency certificate (“TRC”). On the same tone, a new regulation (reg. 20A) was added to the Income Tax Regulations 1996 providing payment of service fee when applying for a TRC. The new measure was effective as from 17 February 2013 and is set as follows:
- In the case where the applicant is a collective investment scheme, am amount of USD 1,000;
- In any other case, an amount of USD 200;
Therefore, the MRA will issue only one general TRC without making any particular reference to any DTA except where a TRC is required under a specific DTA, and then the MRA will issue accordingly. The applicant will in such a case have to pay an additional fee depending on the category of the applicant.
The service fee is payable to the Mauritius Revenue Authority (“MRA”) in USD via a bank transfer, cash or from an advance payment account with the MRA. All applications for TRCs must be made on the prescribed TRC form to the Financial Services Commission for onward recommendation to the MRA.
Applicants have been advised to submit applications for renewal of TRCs at least 30 days prior to the expiry of the current TRCs. Upon recommendation made to the MRA, the Commission will issue a “TRC Recommendation Notice” which can be collected at the counter of the Financial Services Commission. Upon settlement of the relevant service fees to the MRA, The TRC can be collected from the MRA.
Please note that except for some procedures which have been revised as explained above. The practice adopted and the procedures laid down in Circular CL011006 and CL II/220408 will remain unchanged.