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Pursuing our Transformative Journey – the Mauritian Budget 2018 – 2019

The Hon. Pravind Jugnauth, Prime Minister and Minister of Finance and Economic Empowerment painted a rather optimistic picture of the country’s performance, with some healthy fundamentals.

From a tax perspective the Budget 2018-2019 provides a number of measures that aim at creating new poles of economic growth and making Mauritius a High Income country. Further, in the wake of the Action Plan on Base Erosion and Profit Shifting (“BEPS”) action plan, the Budget has brought tax reforms that will comply with the proposals made by the Organisation for Economic Co-operation and Development (“OECD”).

One of the measures to address Proposals by the OECD, is that the deemed foreign tax credit will be abolished and replaced by the concept of an 80% partial exemption on any foreign source income. This is, however, subject to companies meeting the substantial activities requirements as prescribed by the Financial Services Commission, which is again a condition under BEPS Action Plan.

One major change in the offshore sector, will see the Category 2 Global Business regime will be abolished, but GBC2 Licences issued prior to 16th October 2017 will be grandfathered up to 30 June 2021. What happens to the companies incorporate post the 16th October 2017 and December 2018 is still unclear.

Key Financial Services measures introduced include:

Global Business sector

  • A new harmonised fiscal regime for domestic and Global Business Companies
  • The Deemed Foreign Tax Credit regime for Category 1 Global Business Licence companies will be abolished as from 31 December 2018
  • A partial exemption regime whereby under certain conditions, 80% of specified income will be exempted from income tax
  • No new Category 2 Global Business licence will be issued from January 2019 and companies existing under this regime prior to 16 October 2017 will be phased out by 30 June 2021
  • Enhanced substance requirements for entities holding a Global Business Licence
  • Development of an equivalence framework with other key jurisdictions
  • Collaboration with the OECD for hosting a Regional Centre for capacity building and best practices to combat financial malpractices


  • Abolition of Deemed Foreign Tax Credit (“FTC”) regime available to companies holding a Category 1 Global Business Licence (“GBC1) as from 31 December 2018
  • Partial exemption regime for companies (except banks) whereby 80% on specified income such as foreign source dividends, interests, royalties and other income from specified financial services will be exempted from income tax
  • Partial exemption regime available upon satisfaction of pre-defined substance requirements of the Financial Services Commission (“FSC”)

You can download the budget speech by clicking the following link - BUDGET SPEECH 2018.