Mauritius: Updated guidance on interest income and dividends subject to partial exemption

CIGA requirement will only apply when global business companies are claiming 80% tax partial exemption on certain qualifying income

Updated guidance on interest income and dividends subject to partial exemption

The Financial Services Commission clarified that the “core income generating activity” (CIGA) requirement will only apply when global business companies are claiming the 80% tax partial exemption on certain qualifying income. Global business companies that are not claiming the partial exemption will not be required to meet the CIGA requirement.

Background

Effective 1 January 2019, the deemed foreign tax credit was replaced by the 80% tax partial exemption. Companies that were issued a global business license on or before 16 October 2017, were “grandfathered” and allowed to claim the deemed foreign tax credit until 30 June 2021.

The 80% tax partial exemption is available on certain qualifying income streams such as foreign-source dividend income, interest income, and income derived by “collective investment schemes” (CIS), on satisfying certain pre-defined criteria under the Income Tax Act 1995 and the Income Tax Regulations 1996. Companies claiming the partial exemption may be subject to a CIGA requirement (e.g., a company can claim the partial exemption on interest income only if the core activity (or one of its core business activities) is money lending, debt financing, and investing in debt instruments). Read TaxNewsFlash

Read a January 2022 report [PDF 142 KB] prepared by the KPMG member firm in Mauritius 

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