The Mauritius Revenue Authority (MRA) updated operational guidelines governing the partial exemption regime under the Income Tax Act, refining tax administration rules for Global Business Companies (GBCs) and cross-border holding vehicles. With a baseline corporate tax rate of 15%, the jurisdiction offers a 80% partial exemption on qualifying income streams, effectively reducing the net corporate tax liability to 3% for qualifying international entities. For family offices, international investment funds, and cross-border holding structures, aligning operational activities with these statutory substance criteria is essential to maintaining low effective tax rates and preserving cross-border tax treaty benefits.
Navigating the 80% Partial Exemption on Foreign Income Streams
Under the Income Tax Act, qualified Mauritius Global Business Companies benefit from an 80% partial exemption on specific categories of foreign-source income. Eligible revenue streams include foreign dividends (provided they are not allowed as a tax deduction in the source country), interest income earned by foreign-invested holding structures, profits generated by overseas permanent establishments, and foreign-sourced income derived by collective investment schemes (CIS).
To claim this 80% partial tax reduction, foreign holding companies must satisfy statutory substance criteria established by the Financial Services Commission (FSC). These requirements stipulate that the company must employ an adequate number of qualified professionals in Mauritius and incur a minimum level of annual local operating expenditure proportionate to its corporate activities.
Double Taxation Avoidance Agreements and Withholding Tax Relief
Mauritius maintains a vast network of over 40 Double Taxation Avoidance Agreements (DTAAs) across Africa, Asia, Europe, and the Middle East. Under this treaty architecture, outbound dividend distributions, interest remittances, and royalty payments made by a Mauritius GBC to foreign shareholders are subject to zero withholding tax in Mauritius.
Furthermore, where the 80% partial exemption is not applied, Mauritius entities retain the statutory option to claim Foreign Tax Credits (FTC) against local tax liabilities for underlying foreign tax paid at source. Foreign parent entities must maintain audited financial records, valid tax residence certificates issued by the MRA, and proper transfer pricing documentation to ensure ongoing treaty protection against foreign tax audits.
Key Differences in Setup Options
Utilizing the 80% Partial Exemption Regime enables international investment vehicles to achieve an effective corporate tax rate of 3% on qualified foreign income while maintaining full legal compliance with OECD BEPS standards. Conversely, operating an unexempted local entity subjects foreign-sourced income to the standard 15% corporate tax rate, although foreign tax credits may still be applied to mitigate double taxation risks.
Guiding Global Expansion
As Indian Ocean financial hubs align with international tax transparency standards, establishing a proactive corporate tax architecture protects foreign assets and optimizes cross-border capital flows.
Explore our International Tax Advisory Capabilities or reach out directly to our advisory team:
JUDr., LL.B, LL.M
Founder of Benson Formations and Vasil Group – specialist in cross-border Tax & Business Structuring.
Email: office@bensonformations.com
Phone: +44 203 974 1244
Benson Formations 25+ years, 60+ Jurisdictions, a boutique consultancy, company formation and corporate services firm focused on helping modern entrepreneurs set up and run their onshore and offshore companies. Benson Formations is the corporate services branch of Vasil Group, which delivers legal, accounting, advisory and corporate services.
