Definition of a Company in Mauritius
In Mauritius, a company is defined as a corporate body (excluding local authorities), whether incorporated locally or abroad. For income tax purposes, a company is treated as a separate taxable entity distinct from its shareholders. Gross income for a company includes earnings from business activities, rent, royalties, premiums, property income, dividends, interests, and other sources.
Corporate Tax Rate
The corporate tax rate in Mauritius is currently set at 15%. Historically, this rate has fluctuated significantly. Between 1999 and 2015, the average corporate tax rate was 21.91%, with a peak of 35% in 2000 and a low of 15% in 2008. This nearly 20% fluctuation over eight years reflects the country’s economic volatility and its heavy dependence on foreign trade. When European markets experienced downturns, Mauritius felt the effects keenly.
Importance of Corporate Tax Revenue
Revenues from corporate tax are a major source of income for the government of Mauritius. These funds are essential for financing public services and infrastructure development. The adjustments in the corporate tax rate over the years have been influenced by the need to balance attracting foreign investment with ensuring adequate government revenue. Lower tax rates have often been employed to make Mauritius an attractive destination for international businesses, while higher rates have been used to shore up government finances during economic downturns.
Economic Dependency and Tax Policy
The dependence on foreign trade means that Mauritius’ economic health is closely linked to global market conditions. This interdependence necessitates a flexible tax policy that can adapt to changing economic environments. The adjustments in the corporate tax rate over the years demonstrate the government’s efforts to navigate these challenges while maintaining fiscal stability.
Conclusion
In conclusion, the corporate tax rate in Mauritius, currently at 15%, has seen significant changes due to economic fluctuations and the country’s reliance on international trade. This tax is a crucial revenue stream for the government, and its rate adjustments reflect the balancing act between fostering a business-friendly environment and ensuring sufficient public funding.
For your next read, you can remain in the same setting but change a bit the focus by reading our blog on: ‘Double Taxation Agreements’. There you could learn about its benefits as well as the impact it may have in the future.
