Capital Gains Taxation in Mauritius
Definition of Capital Gains
In Mauritius, capital gains refer to the profit or gain realized from the disposal of capital assets. Capital assets include:
- Real estate properties
- Stocks and shares
- Bonds and debentures
- Business assets
Calculation of Taxable Capital Gains
Taxable capital gains are calculated as the difference between the selling price of the asset and its acquisition cost. The formula is:
Capital Gain = Selling Price - Acquisition Cost - Expenses
Adjustments or deductions may be allowed in the calculation of the gain, such as expenses related to the sale (e.g., brokerage fees, legal fees) and improvements made to the asset during ownership.
Tax Rates
Capital gains are taxed at a flat rate of 15%. However, certain exemptions or preferential tax treatment may apply under specific provisions of the Income Tax Act.
Legal Framework
The taxation of capital gains in Mauritius is governed by the Income Tax Act (ITA), specifically:
- Section 8(1) defines chargeable income, which includes gains or profits from the disposal of capital assets.
- Section 15 provides for the calculation of taxable capital gains.
- Section 16 specifies the tax rate applicable to capital gains.
Policy Objectives
The capital gains tax system in Mauritius aims to:
- Ensure that individuals and businesses contribute their fair share of tax on profits realized from investments and asset disposals.
- Maintain a neutral tax treatment across different sources of income.
- Promote investment and economic growth.
Conclusion
Mauritius has a straightforward capital gains tax system with a flat rate of 15%. The tax is calculated as the difference between the selling price and the acquisition cost of the asset, with adjustments for expenses and improvements. The legal framework governing capital gains taxation is clear and provides for certain exemptions and preferential treatment in specific cases.
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