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The Mauritius FSC clarifies requirements to meet substance conditions

Insight 20 January 2022

The Mauritius FSC clarifies requirements to meet substance conditions

Effective 1 January 2019, the deemed tax credit regime was abolished and replaced by a partial exemption regime on qualifying income. In order to benefit from this preferential tax regime, entities are required to satisfy certain conditions relating to the substance of their activities.

As a reminder, effective 1 January 2019, the deemed tax credit regime whereby companies holding a Category 1 Business Licence were entitled to claim a deemed tax credit of 80% was abolished and replaced by a partial exemption regime on qualifying income.

In order to benefit from this preferential tax regime, consistent with the Income Tax Regulations 1996, entities are required to satisfy certain conditions relating to the substance of their activities as follows:

  • the core income generating activities (CIGA) should be carried out in Mauritius;
  • the entities should employ, directly or indirectly, an adequate number of suitable qualified persons to conduct the CIGA; and
  • the entities should incur a minimum level of expenditure proportional to its level of activities.

The Financial Services Commission (FSC) has clarified vide Circular, dated 17 January 2022, that CIGA requirements will only apply to those holders or applicants for a Global Business Licence (“GBL”) wishing to avail of the preferential tax regime. Accordingly, GBLs not claiming partial exemption are not required to meet the CIGA requirements.

Mauritius enacted progressive measures aligned to OECD’s BEPS initiatives with the objective to enhance the International Financial Centre’s competitiveness and transparency, including the phasing out of the deemed tax credit regime. The Circular brings further clarity and tax certainty, welcomed by the global business community.”

Sheena Oograh-Rajcoomarsing
Manager, Tax, Sanne Mauritius

How can Sanne help

We are only a step away to assist you in:

  • carrying out health checks on adequacy of substance requirements put in place for your structures;
  • and assessing eligibility of partial exemption for your structures and providing guidance and recommendations to ensure the same are in compliance with the economic substance requirements.

Should you require any further details, please reach out to Sheena or Varounen directly. We would be delighted to speak with you.

Let's talk...

Sheena Oograh-Rajcoomarsing

Manager, Tax, Mauritius

Sateeta Jeewoolall 

Associate Director, Mauritius

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