Mauritius’ system of taxation of interest income, particularly those relating to payments to foreign companies, is structured to support international business while ensuring efficient tax policies.
Corporate tax rate
Interest income paid to foreign companies is generally taxed at a rate of 15% in Mauritius. However, this rate may be reduced under bilateral tax treaties that Mauritius has negotiated with various countries. These treaties often provide for lower withholding tax rates or exemptions based on specific agreed conditions.
Exemption for Non-Resident Entities
A notable feature of Mauritian tax legislation is the exemption from withholding tax for interest payments to non-resident entities, including Category 1 Global Business Companies (GBC1) and Category 2 Global Business Companies ( GBC2). These companies, registered under the Mauritius Global Business License scheme, enjoy tax benefits and regulatory privileges aimed at promoting international business activities.
Compliance and Declaration
Although interest paid to foreign companies may be exempt from withholding tax, it remains subject to tax under Mauritius’ self-assessment system. Foreign companies receiving interest income must declare and pay tax on such income in Mauritius in accordance with applicable rates and regulatory requirements. Compliance with Mauritius tax laws, including accurate reporting and timely payments, is crucial for foreign companies operating in the jurisdiction.
Strategic positioning
Mauritius’ interest income tax policies are strategically designed to position the country as a global finance and investment centre. By offering favourable tax treatment to foreign entities and maintaining a transparent regulatory framework, Mauritius aims to attract international capital while ensuring the viability and integrity of its financial services sector. These measures contribute to strengthening Mauritius’ reputation as a jurisdiction conducive to business growth and economic development.
Conclusion
In summary, Mauritius’ approach to the taxation of interest income balances incentives for international investment with strong tax compliance measures. The exemption from withholding tax for non-resident entities and the bilateral tax treaty provisions underline Mauritius’ commitment to promoting a globally competitive business environment.
