A Guide to the Use of Double Tax Treaties in Mauritius & the Seychelles
Treaties currently in force are with Barbados, Belgium, Botswana, Croatia, Cyprus, France, Germany, India, Italy, Kuwait, Lesotho, Luxembourg, Madagascar, Malaysia, Mozambique, Namibia, Nepal, Oman, Pakistan, People’s Republic of China, Rwanda, Senegal, Seychelles, Singapore, South Africa, Sri Lanka, Swaziland, Sweden, Thailand, Uganda, United Arabs Emirates, United Kingdom and Zimbabwe.
Treaties awaiting ratification include Bangladesh, Malawi, Nigeria, Russia, State of Qatar, Vietnam, Zambia and Tunisia.
The Seychelles have ratified around 8 treaties including South Africa, China, Indonesia and Mauritius.
Tax treaty benefits are only available to resident entities or persons. Accordingly, a resident entity must be liable to tax in Mauritius or Seychelles under its laws by reason of its domicile, residence or criterion of a similar nature. Mauritius provides a wide range of resident entities and hybrid structures including the Global Business Company, the Trust and the Société. Seychelles provides for a CSL company and a domestic company. In Mauritius, a resident company including the Global Business Company may benefit from the tax treaty network. It is also possible for Mauritian branch of a foreign company to access the tax treaties by satisfying the conditions of residence. Entities wishing to avail benefits of a tax treaty must obtain a Tax Residence Certificate issued by the Mauritius Revenue Authority in Mauritius and same applies in the Seychelles.
All Mauritian double taxation avoidance treaties are based on the OECD Model Treaty of 1977. Under the post-independence treaties concluded so far, tax sparing is available. This implies that where Mauritian source dividends are exempt from tax under the tax incentive provisions, the foreign investor is entitled to credit a notional amount of Mauritian tax against the tax payable (if any) in his country, thus reducing his domestic tax liability.
All Seychelles double taxation avoidance treaties are based on either the OECD Model Treaty or the United Nations Model Treaty. However no credits are allowed in the Seychelles to reduce the domestic tax liability.
If a resident of Mauritius derives income from a foreign country that has not concluded a tax treaty with Mauritius and foreign income tax is paid on the income, that tax may be credited against Mauritian income tax. The credit is limited on a source-by-source basis to the lesser of the foreign tax paid on the income concerned and the Mauritian income tax payable on the same income. In the case of foreign source dividends, no credit relief if granted for foreign corporate income tax borne on the profits out of which the dividends are paid (underlying tax). This does not apply for the Seychelles, because the credit method is not used.