TAXATION

Sandra Balthazar

Types of taxes
– Consumption Tax / VAT <~
– Road Tax
– Personal Income Tax - Individual Income <~
– Corporate Tax <~
– Property Tax - annualy
– Solidarity fund
– Capital Gains Tax - Tax of profit on gain / purchase of a company's share
(Not in Mauritus)
– Inheritance Tax - Not in Mauritius
– Customs Tax
– Consolidated fund - except well established tax.
– Municipality Tax

Mauritius Tax System

Self-assessment system - each taxpayer is responsible to compute his tax and
pay the appropriate amount.
A person who is resident (Not nationlity of MRU) in Mauritus is liable to tax on
his worldwide income.
A non-resident is taxed on income derived from sources in Mauritus.

The Mauritius Revenue Authority

– Administer all tax payables in Mauritius
– Try to control unofficial / undeclared money (Not under aware of the MRA)
– MRA report to the Ministry of Finance
– Director General - Mr. Lall

Why are taxes important ?

"In this world nothing can be said to be certain, except Death and Taxes"
_Benjamin Franklin
Taxes acts as a redisstribution mechanism.
Acts as a deterrent - Demerit goods, gambling
Subsidise certain sectors/products
– Infrastructure
– Health & Community Welfaire
– Free transport
– Free education
– Old age Pensions
– Fiscal Policy (Multiplyer effect) - More spending power

Imposition of Tax
Income tax - Every year - paid to the Director General by every person - on all
Income other than exempt income during the preceding year - to be charged at
a rate of 15% on income

Income tax year runs from 01 July - 30 June

For eg: Taxable income derived (All Income) from 01 July 2020 to 30 June 2021
is to be paid if any, in October 2020, latest.

Derivation of Income - Bases of Taxation.

– How do know whether someone should be subjected to pay tax ?
– Depends on his Source of Income
– Depends on his dependence (children,Minor siblings,Spouse,Totally
Disabled Person - laying on a bed) - As soon as the dependence starts
earning a full time basis the person do not fall anymore on the dependence
list.

– When does someone fall within a country’s tax ‘net’?

– When does a country exercise its power to tax ?

Income Tax - Taxation at source v/s residence taxation

– Residence Taxation
Residential or political allegiance connecting the taxpayer to the state where he
exercises political rights (Right to vote).

– Taxation at source
Where is the wealth is produced - Where are the resources being used
(business activity) ?
It all depends on the tax treaty between the two countries.

As per Income tax act, income should be declared as soon as the work has been
performed no matter the period of the income tax year.

Who is a tax Resident ?

Individual :
– A person who resides in Mauritius.
– A person who has the right to vote.
– Has been present in Mauritius in an financial year or for at least 183 days
or more.
– Or 2 consecutive years for at least 270 days or more.

Tax Rates for Income Tax ?

15 % of chargeable income for both Individuals and Companies.

Taxation and the hospitality industry

~ Environmental Protection Fund
~ Income Tax (PAYE)
~ Corporation Tax
~ Excise Duties
~ Consumption TAX (VAT)

Value Added Tax

(Consumption tax) - Purchases & Sales.
Not everybody pays VAT
~ (MRA-Registered NGO’s & Charitable societies) do not pay VAT.
~ People coming for holidays in a country.
~ diplomatic bodies (the whole family).

What is Value Added Tax ?

– Consumption tax
– Value added on every non-exempted consumption or usage purchased.
– Its the end consumer who is accountable for VAT tax at each step in the
manufacturing process because the tax will be deducted on the tax to be
charged to the next process except for the end purchaser.

Do all Business need to charge VAT ?

● There’s certain items which are not taxable supply.
● Sole-traders which are not VAT registered - based on the level of revenue.
● Taxable person YES (Advisory Consultants).
● Doctors and health related services Not obliged

Important :
~ Supply must be made in Mauritius
~ Taxable Supply
~ Taxable Person
~ Business location

Taxable Supply
Related to goods and services produced in Mauritius which are not exempt
supplies.
Include : - Zero Rated Supply
~ VAT is charge at 0% for these products - If tomorrow we need to increase the
percentage charge, it will be more easy to change the variance than changing
the category.
– Exported goods & services
– Any supply of goods made by an operator of a duty free shop in port or
airport.
– Fruits, Vegetables, Meat, fish, milk, butter, Cheese, honey, soya bean, tea,
spice, Sugar, bread, rice.
– Pharmaceutical products
 – Photovoltaic panels
– Fees payable for examination of vehicles
– Burglar alarm systems
– Sanitary towels and tampons
– Production of films for export
– Printed books, leaflets, brochures pamphlets
– Cooking gas in cylinders of up to 12kg for domestic use.
– The transport of passengers by light rail.
– Subscriptons to professional bodies (ACCA, MIPA)

Include : - Exempt Supply

~ No VAT is charge at all on certain goods.
– Staple food item (Wheat, cereals, flour)
– Medical, hospital & services
– Public transport excluding contract buses, cars
– Postal services
– Agricultural inputs, bio-pesticides
– Renting of fixed telephone lines of an amount up to Rs 100 per billing
period.
– Educational and training services provided by institutions registered with
the Mauritius Qualification Authority.
– Residential renting for a continuous period exceeding 90 days.

Who is a registered person (Company)

Every person who makes taxable supplies and whose turnover of taxable
suppliers exceeds or is likely to exceed Rs. 6 million per annum - Need to
register for VAT with the MRA. Otherwise not eligible to registrer.

Every person offering Consultancy & Advisory services, Architech, Engineers,...

with whatever turnover per annum.

Impact on VAT registration

● Exclusively zero-rated supplies - Yes
● Exclusively Exempt supplies - No
 ● Mixed supplies (supermarket) - Yes

VAT rates
– 15 % flat
– 0 % - zero rated
– No % - Exempt products

Output VAT
– 15 % VAT charge on sales from client
– (Actual price x 15%)
– VAT included on the invoice of the company.

Input VAT
– 15 % VAT paid on purchases to the supplier.
– (Actual price x 15%)
– VAT included on the invoice of the supplier.

Items for which input TAX cannot be claimed:

● Goods & Services used to manufacture an exempt supply.
● (Capacity less than 9 pax) Company car expenses not related to work
which include VAT (Housekeeping Manager having a company car for own
use).
● Petroleum gas use in Company car for own use.

VAT Refund
– Amount receive from MRA if Input VAT > Output VAT after each Quarterly
while submitting VAT records.
– VAT REFUND = Output VAT - Input VAT
– MRA does not pay us Cash back, It is brought forward for the next filling.

VAT Paid
Amount pay to the MRA if Output VAT > Input VAT after each filling of
transaction within One month time (30 days).
VAT Paid = Output VAT - Input VAT
VAT Invoice
– If registrered company, Compulsory to issue a VAT Invoice to a client
(either VAT Registered or non VAT Registered).
– A VAT Invoice issued by a registred person shall specify the following:
● Company name, Business Address, VAT Registration Number, BRN
● Serial Number (Numero de la Facture) & Date of issue
● Quantity and description of goods or services
● Name, Address, VAT Registration Number, BRN of purchaser or Id number
if not company based.
● Original price amount for the Good or Services
● VAT Total (15% x price amount)
● Price amount including VAT
● Items bearing Zero rated
● Items beating Exempt

VAT Return (Corporate)

*All companies that generate a revenue of more than Rs. 10 million annually,
needs to file the VAT Return Monthly.
* All companies that generate a revenue of less than Rs. 10 million annually,
needs to file the VAT Return Quarterly.

QUARTERS DEADINE for submission of VAT

RETURN
Jan- Mar 30th April
Apr - Jun 31st July
Jul - Sept 31st Oct
Oct - Dec 31st Dec
Corporate - Value Added Tax - Return and payment
If turnover of the company > Rs. 10 Milllion - Monthly + 1 (today's date + 1
month)
If turnover of the company > Rs. 10 Milllion - Quarterly

Value Added Tax - Penalities

If not filed on time - Fix penalty at Rs 2,000 / month upto Rs. 20,000 ~ (SMEs
turnover <Rs. 10 million - Fix penalty at Rs 5,000) + 10% (2%-SME) on the Tax
amount due to the MRA + 1% Interest / month

For Compulsory registration - Rs. 5,000 / month upto Rs. 50,000.

CORPORATION TAX
– Tax impose on chargeable profit of a company.
– Flat Rate applied 15%
– Companies involve in exports Only 3%
– Offshore companies with business in Mauritius & Abroad pay 3% - 15%.

Tax residency of a company

Incorporated in Mauritius or has its central management (Board of Directors)
and control (Decisions are taken) in Mauritius.

Corporate Tax - Return and payment

– Return shall be submitted not later than 6 months from the end month of
the accounting period (30 June)
– If done after 30 June, Fix penalty at Rs 2,000 / month upto Rs. 20,000 +
0.5 to 5% (2%-SME) on the Tax amount due to the MRA.
– For dormant companies - to file a corporate annual tax return at a zero
value.
– If company makes annual losses - The company has up to 5 years to
brought forward the losses.
– For start-ups companies, they have until 18 months to file the corporate
annual tax return for the 1st operating year.

What is Chargeable income (Profit before Tax)?

~IN THE MAURITIAN CONTEXT~
. Excludes all accounting subjectivity expenses.
– (Provision for doubtful debts, Depreciation, Bad debts, wellfare..) - Based
on accounting assumptions.
 – All provisions are assumptions hence not considered as an expense by the
MRA.

. Excludes all expenses personal expenses

– Rent on personal house
– Car expenses

. Excludes Donations and sponsorships to registered organisation.

. Excludes Gifts and Entertainement offer to Clients (excluding emloyees)

How to charge tax on Chargeable Income

Chargeable Income = Gross profit - Non-allowable expenses (Under Income Tax
Act)

NET PROFIT 437,400

Add Back:
Depreciation. 3000
Bad bepts 100
Provision for doubtful dept 500
Rent for owned house 50000
End of Year Party & Gifts for Clients 50000
________
103600
Chargeable Income 566,000

Tax @ 15% 15% 84,900

Capital expenditure v/s Revenue Expenditure

Capital Expenditure = Long term purchase of assets (Vehicles, Buildings,
Furniture)
Revenue Expenditure = Day-to-day expenses of the company(Salaries, Rental,
Maintenance of vehicles)
For the MRA everything related to Capital Expenditure, is not considered as an
expense (It is not a Taxable Expense) for eg: Tax adjustments (Depreciation),
Legal costs to capital expenditure only not related to Revenue by nature,
Provision (anticipated expenses & Revenues)

Capital allowance / Tax depreciation

– DEF: Same as depreciation but Acceptable for Tax deduction.
– Depreciation is subjective whereas capital allowance is set by the MRA.
Tax Depreciation Rates as per MRA:
● Building ~ 30%
● Motor vehicles (5 years) ~ 25%
● Furniture & Fittings (4 years) ~ 20%
● Golf courses ~ 15%

Corporate Social Responsibily ("CSR")

Chargeable Income rate ~ 2% applied only for corporate.
If a company make loses there's no obligation to pay the CSR
Not applicable to Global Business Licence companies
As from 1 Jan 2019, MRA collects CSR donations from companies to distribute
to NG organisations.

PERSONAL INCOME TAX

A fiscal year always start 1 July and ends 30 June.
Even if not a tax resident in fiscal year period, if source of income is in a country
depending on the tax treaty, he is required to pay tax on his source of income at
15%.

Income
Any emoluments obtained where duties are performed from any organisation
whether partly or wholly in Mauritius. Domicile in mauritius - 183-273 days -
right to vote

Emoluments
Any advantage in money or in money’s worth

Certain income which are exempted

– Dividend
– Stipend (most teh time)
– Share of profits (depends on the amount)
– Interest income (on savings amount)
– Gifts
– Pocket money
– Medical expenses
– Meal allowance
– Bus fair
– Travelling allowance less than Rs.11,500 (Rs. 1 - 11,500) {Not to be applied
when you are asked to work abroad}
– Duty free allowance
– Medical Insurance paid for by your company
– Insurance paid for by the employer is an exemption
– Uniform allowance

RECAP
– Benefits in Kind by the MRA:
● Car Benefits (Exceeding Rs.11,500)
● Housing Benefits / allowance (Bills)
● Education fees paid by to your children by the employer
● Accomodation fees
● Tips
● Loan
● Overtime
● Telephone allowance
● House maid paid for by the company

Allowable Deductions (cash-outs)

– Liscence or membership fee which I need to pay for to operate my
business
 – Dependent child attending full-time undergraduate course.
Mauritius Parents Payment effectuated to their students attending
undergraduate course. Max 200,000 for international Students; Max 175,000.
– Investment in rainwater harvesting system.
– Interest relief on secured housing loan (home loan, apartment loan,
construction loan, renovation)
– Relief for medical or health insurance premium.
– Deduction for household employees - But we need to declared as
employee up to maximum of Rs. 30,000.
– Office Stationaries
– Insurance paid for by the employee is an allowable deduction
– Solar energy investment allowance.

Income tax Rate

For cumulative 13 months (EOY-SALARY):
Individual not exceeding Rs 650,000 / 13 months (<50,000 per Month) - 10 %
Exceeding Rs 650,000 / 13 months (>50,000 per Month) - 15%

Income Exemption Threshold

Solidarity Levy
Tax which has as for main purpose to act as a redistribution mechanism. Taking
income from rich and redistribute to poor.
Applicable for people whose annual income exceeed Rs. 3 million
– Tax Rate : 5% of difference exceeding Rs. 3 millions.
– Applicable to : Chargeable Income, Dividend from local company, Share of
dividends.
– Excluded : Lump sum as pension, Compensation.

Pay As You Earn (PAYE) system

Breaks a person's annual Income tax amount into monthly payment.
Applicable to persons making annual salary more than Rs. 650,000
It is deducted through his monthly salary from the employer and pay back to the
MRA.
If there's excess in PAYE payment, we can claim difference from the MRA.

If Employer doesn't file PAYE to the MRA - Fix Penalty of 10% of the amount of
tax payable + 1% interest / month tax

Personal Income Tax - Return and payment

– Always 30 Sepetember
– If not filed on time - Fix penalty at Rs 2,000 / month upto Rs. 20,000 + 0.5
to 5% on the Tax amount due to the MRA.

Tax Avoidance
– To organise financial affairs in any way that tax burden is minimised.
– It is legal - its just about taking personal advantage on taxes
– For eg: moving funds from bank account which pays taxable interest to an
ISA which pays tax-free interest.

Tax Evasion
– Cover a source of income from the MRA
– Tuition teacher hiding their revenue from tuition courses.

Income Tax on Winnings

– 10% of excess if > Rs. 100,000 - timeframe of 20 days.

Dispute & Resolution Panel

– If PENALITIES more than Rs. 10 millions are concerned
– Companies are asked to present to the Alternative Tax Dispute Resolution
panel (ATDR)