Double Taxation Avoidance Agreements in Mauritius: Make the most of advantageous fiscal incentives!

In a global environment where tax transparency and regulatory compliance are becoming increasingly important, businesses must be structured in credible jurisdictions that offer tax competitiveness and a strong legal framework. Thanks to its network of Double Taxation Avoidance Agreements (DTA) Mauritius provides Global Business Companies (GBCs) with opportunities to optimize taxes while remaining compliant with international standards.

If you are looking to centralise, structure, or streamline international financial flows, why not set up a GBC in Mauritius? This strategy can often help reduce a group’s overall tax burden while ensuring full compliance. But to benefit from these DTAs, it’s essential to understand the eligibility requirements, the types of income covered, and how Mauritius’ tax system interacts with these treaties. C&S Secretarial Services gives you an insight.

What are Double Taxation Avoidance Agreements (DTA) for?

A Double Taxation Avoidance Agreement is a bilateral treaty between two countries aimed at preventing the same income from being taxed twice: once in the country of origin (at source) and again in the country of residence of the income’s beneficiary. DTAs aim to:

• Clearly define which country has taxing rights over specific types of income;
• Reduce or eliminate withholding taxes on dividends, interest, and royalties;
• Provide a tax credit or exemption for income already taxed abroad;
• Set up mechanisms to resolve tax disputes.

For a Mauritian GBC, DTAs play a key role. They allow cross-border income flows to be structured in a tax-efficient manner, while ensuring clarity and security for the tax authorities involved.

Mauritius’ tax treaty network

Mauritius has signed more than 45 tax treaties with countries across Africa, Asia, Europe, and the Middle East. Key jurisdictions include:

• Europe: France, Luxembourg, Germany, United Kingdom, Italy, Belgium, Malta, Sweden.
• Asia: India, China, Singapore, Malaysia, Pakistan.
• Africa: South Africa, Kenya, Nigeria, Uganda, Ghana, Senegal, Zambia.
• Middle East: United Arab Emirates, Qatar.

This network enables GBCs to structure investments and financial flows from a central hub while accessing multiple international markets in a secure and tax-efficient manner.

How can a GBC access DTA benefits?

To benefit from a tax treaty, a GBC must meet four cumulative conditions:

1. Valid GBC licence

The company must hold a GBC licence issued by the Financial Services Commission (FSC), the regulator of Mauritius’ non-banking financial sector.

2. Tax residency in Mauritius

The GBC must be considered a tax resident in Mauritius, meaning its place of effective management must be in the country. This includes:

• Having at least two directors who reside in Mauritius;
• Holding strategic meetings locally;
• Making key decisions within the territory.

3. Obtaining a Tax Residence Certificate (TRC)

This certificate is issued by the Mauritius Revenue Authority (MRA) and is essential to activate a tax treaty and prove residency to foreign tax authorities.

4. Demonstrating economic substance

The GBC must show that it carries out real economic activity in Mauritius. This includes:

• Local operational expenses (e.g. salaries, rent, service providers);
• Human and/or administrative resources based in Mauritius;
• Evidence of a functional link between its business activity and Mauritius.

These substance requirements align with OECD’s BEPS (Base Erosion and Profit Shifting) standards and the EU’s efforts to combat tax base erosion.

What types of income are covered by DTAs?

DTAs can help reduce taxes on three main categories of international income: dividends, interest, and royalties.

Dividends

Dividends received by a GBC from subsidiaries located in treaty-signing countries may benefit from:

• Reduced withholding tax (often down to 0%, 5%, or 10%);
• An effective tax rate of 3% in Mauritius, thanks to partial tax credit mechanisms.

Example: Without a DTA, India applies a 20% withholding tax on dividends. With the Mauritius–India DTA, this rate can be reduced to 5%, subject to holding conditions.

Interest

Interest earned from loans granted by a GBC to foreign entities can benefit from:

• Lower withholding tax rates in the borrower’s country;
• A 3% tax rate in Mauritius on net interest income.

Royalties

If the GBC owns patents, trademarks, or software, royalties can be routed through Mauritius to:

• Reduce tax in the source country;
• Repatriate income to Mauritius at a reduced rate.

These types of income fall under high value-added activities, which are subject to strict substance requirements.

Real-world examples of GBC structures in Mauritius

A Pan-European Investment Holding

A GBC-registered holding company in Mauritius holds stakes in subsidiaries in France, Germany, and the UK. With the help of DTAs:

• Dividends are repatriated with lower withholding tax (5–15%);
• The company pays an effective 3% tax rate in Mauritius;
• A second round of tax on these earnings is avoided.

An Intra-Group Financing Company

A GBC lends at preferential rates to sister companies in Kenya and South Africa. This setup:

• Enables interest income to be taxed minimally or not at all in the source countries (thanks to DTAs);
• Benefits from light tax treatment in Mauritius;
• Centralises financing in a well-regulated, reputable jurisdiction.

What to avoid: Artificial structures

Tax treaties are designed to avoid double taxation, not to create double non-taxation. A GBC that does not meet substance requirements or is perceived as a shell company may:

• Have its TRC challenged;
• Be denied DTA benefits;
• Face tax adjustments in the source country

The “beneficial ownership” test is also key. A GBC must have genuine control and economic ownership of the income, not just act as a pass-through entity.

C&S Secretarial Services’ expertise

Structuring financial flows through a GBC requires tailored support. C&S Secretarial Services, based in Ebène, offers a multidisciplinary team of experienced professionals,including lawyers, tax advisors, and corporate administrators.

C&S Secretarial Services’ services include:

Reviewing relevant tax treaties based on your sector and country of residence;

• Setting up your GBC in 48 hours and securing the FSC licence;
• Applying for the TRC from the MRA;
• Ensuring compliance with economic substance and local governance requirements;
• Providing full administrative support, including bookkeeping, tax filings, audits, and annual obligations.

The firm is led by Anjela Sonya Mohadeb, a lawyer (LLB – Newcastle University) and ICSA member, and Shyam Mohadeb, Chartered Accountant and former PwC Partner. Their combined expertise ensures a strategic, secure approach aligned with partner jurisdictions’ expectations.

In conclusion

Mauritius’ Double Taxation Avoidance Agreements offer strong tax planning opportunities for GBCs, provided they comply with residency, substance, and transparency requirements. Used strategically, these agreements can lower overall tax costs, increase the profitability of cross-border investments, and ensure full alignment with OECD standards.
Get in touch with C&S Secretarial Services for expert guidance on structuring your business in Mauritius.