Tax Residency Criteria in Mauritius
Determining tax residency in Mauritius is crucial for individuals and entities to understand their tax obligations. According to the Income Tax Act of Mauritius, an individual is considered a resident for tax purposes if they meet any of the following criteria:
- Physical presence in Mauritius for more than 183 days in a tax year (July 1 to June 30).
- Domicile in Mauritius, which is established by a person's permanent home or the place where they intend to reside indefinitely.
- Ordinary residence in Mauritius, which implies a more continuous and permanent presence beyond mere physical presence.
For entities, tax residency is determined based on their place of incorporation or management and control. Companies incorporated in Mauritius are generally considered resident for tax purposes, while foreign companies may be deemed resident if their management and control are exercised in Mauritius.
Impact of International Tax Treaties
Mauritius has entered into several double taxation agreements (DTAs) with other countries to prevent double taxation and promote cross-border trade and investment. These DTAs may modify or provide exceptions to the standard criteria for tax residency as defined in domestic law.
For example, the DTA between Mauritius and India provides that an individual is considered a resident of Mauritius if they are liable to tax in Mauritius by reason of domicile, residence, or any other criterion of a similar nature. The DTA also includes tie-breaker rules to determine residency in cases where an individual is considered a resident of both Mauritius and India under their respective domestic laws.
Rationale and Objectives
The criteria for determining tax residency in Mauritius aim to ensure that individuals and entities with significant ties to the country contribute to its tax revenues. By establishing clear residency rules, Mauritius prevents tax evasion and ensures that individuals and entities are taxed fairly based on their economic activities within the country.
International tax treaties play a crucial role in modifying or providing exceptions to these criteria to prevent double taxation and facilitate cross-border economic activities. These treaties reflect the mutual agreement between Mauritius and other countries to enhance tax compliance and promote economic cooperation.
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