Income Tax Act of 1995

In Mauritius, the Income Tax Act of 1995 provides for various exemptions from income tax, each aimed at fostering specific economic activities and attracting investment into the country. These exemptions cover a diverse range of income sources, as outlined in the Second Schedule of the Act:

  1. Income derived by a Freeport Company: Companies operating within Mauritius’ Freeport zone enjoy exemptions on income derived from activities conducted within the Freeport area. The Freeport regime aims to facilitate international trade, re-export activities, and value-added services within a duty-free environment.
  2. Income derived by the registered owner of a Foreign Vessel: Income earned by the registered owner of a foreign vessel is exempt from income tax in Mauritius. This exemption supports the maritime industry by encouraging international shipping operations under Mauritian flag registration.
  3. Income derived by the registered owner of a Local Vessel (for deep sea international trade): Owners of local vessels registered in Mauritius are exempt from income tax on income derived exclusively from deep sea international trade activities. This exemption aims to bolster the local shipping sector’s competitiveness in international markets.
  4. Capital Gains on Speculative or Investment Gains: Capital gains arising from speculative or investment activities are exempt from income tax. This exemption encourages investment in financial markets and supports capital formation in Mauritius.
  5. Income of a Resident Society: Societies registered as residents in Mauritius enjoy exemption from income tax on their income. This includes non-profit organisations, associations, and other social entities contributing to societal welfare.
  6. Dividends Received and Paid by Tax Incentive Companies: Dividends received and distributed by companies benefiting from tax incentives under specific schemes are exempt from income tax. This encourages reinvestment and distribution of profits within the economy.
  7. Interest on Accounts held by Qualified Corporate (Offshore): Interest earned on accounts held by qualified corporate entities classified as offshore is exempt from income tax. This exemption supports Mauritius’ position as an international financial centre.
  8. Interest on Specific Government Securities: Interest earned on certain government securities specified under the Income Tax Act is exempt from income tax. This promotes investment in government debt instruments and enhances liquidity in the financial markets.
  9. Royalties Payable to Non-Residents by Qualified Companies, Trusts, or Banks: Royalties paid to non-residents by entities meeting specific qualifications under the Income Tax Act are exempt from income tax. This exemption encourages technology transfer and supports intellectual property transactions in Mauritius.

Advantages

These exemptions are strategically designed to attract foreign investment, stimulate key sectors of the economy, and enhance Mauritius’ competitiveness as a business-friendly jurisdiction. They reflect the government’s commitment to creating a conducive environment for economic growth, innovation, and international trade. Companies and individuals operating within these exempt categories benefit from reduced tax burdens, contributing to their operational efficiency and overall economic contributions to Mauritius.