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THE INCOME TAX (REGULATIONS) AMENDMENT 2022

Our tax alert for the month of April addresses three key tax developments regarding the following;

      •  E-commerce platform

      •  Investment dealer license; and

      •  Specialised softwares and systems

The Income Tax (Regulations) Amendment 2022 was gazetted at the beginning of this month and shed light on some  important fiscal advantages for the business community particularly for entities deriving income from e-commerce platforms, investment dealers and specialised software/systems eligible to claim tax reliefs, with due consideration to established conditions.

E-COMMERCE PLATFORM

EDB Mauritius defines e-commerce platform as follows.

‘…e-Commerce activities mean the hosting and maintaining of an e-Commerce platform and providing other related services such as advertising and selling of subscriptions by an e-Commerce operator.

… eCommerce activities that take place within and from Mauritius with the objective to provide a framework:

(a) to enable e-Commerce operators to conduct commercial transactions through electronic networks; and

(b) to provide information in respect of marketing, supply, trade, order and delivery of goods or services.’

 

New regulation for tax treatment for income from e-commerce platform
Tax Holidays : 5 years
Effective timeline for incorporation: 1 July 2020 – 30 June 2025
Core income generating activities (CIGA): Mauritius
Compliance: FSC pre-established substance requirements

 

INVESTMENT DEALERS

An 80% exemption on income from companies holding an investment dealer license will henceforth be available as per the new regulations.  The categories of investment dealers is listed below;

1.A full service dealer authorised to;

  • Act as an intermediary in the execution of securities transactions for clients;
  • Trade in securities as principal with the intention of reselling these securities to the public;
  • Underwrite or distribute securities on behalf of an issuer or a holder of securities;
  • Give investment advice which is ancillary to the normal course of his business activities; and
  • Manage portfolios of clients. 

2.Broker authorised to execute orders for clients, manage portfolios of clients and give advice on securities transactions to clients;

3.Discount broker authorised to execute orders for clients without giving advice;

4.Investment Dealer (Derivatives) authorised to: 

  • Act as an intermediary in the execution of orders for clients in derivatives contracts only; and
  • Act as market maker
  • Investment Dealer (Government of Mauritius Securities and Bank of Mauritius Securities Segment)

SPECIALISED SOFTWARE/SYSTEMS

The new regulation addresses the tax relief on the acquisition or the lease of specialised software and systems. Twice the amount incurred as expenses for software or systems with the following attributes will be considered for tax deduction;

  • Additive manufacturing
  • Optimisation of manufacturing processes
  • Robotics
  • Artificial intelligence
  • Simulation
  • Augmented and virtual reality
  • Horizontal and vertical system integration
  • Industrial internet of things
  • Cybersecurity
  • Big data and analytics
  • Cloud technology
  • Digitisation outreach to customers
  • Enable work from home
  • Improve energy efficiency
  • Engineering tools
  • Product life cycle management

 

The listed software will be subject to income producing activities and have a lifetime of more than one year amongst other conditions. By contrast, the tax deduction will not be applicable to hardware and operating system software.

Specialised software and systems – Tax Treatment at a glance

 

Tax deduction on expenses: 200%
Effective date of purchase/lease: 01 July 2021
Eligible expenses limit: Rs 100,000 – Rs 100 million

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Date of publication: 25 April 2022

Contribution: BD Department