Double Taxation Agreements (DTAs)

Mauritius has concluded over 45 Double Taxation Agreements (DTAs) with countries across Africa, Asia, Europe, the Middle East, and the Americas. This extensive treaty network is the single most important reason why Mauritius has become the preferred platform for cross-border investment, particularly into Africa and South Asia. A Double Taxation Agreement is a bilateral treaty between two countries that allocates taxing rights over various categories of income — dividends, interest, royalties, capital gains, employment income, and business profits — and provides mechanisms to prevent the same income from being taxed twice.

The fundamental purpose of a DTA is to eliminate or reduce the burden of double taxation that arises when two countries both claim the right to tax the same income. Without a DTA, a Mauritius company receiving dividends from a subsidiary in an African country could face withholding tax in the source country and corporate tax in Mauritius on the same income, with only unilateral relief available — which may not fully eliminate the double taxation. A DTA solves this by allocating primary taxing rights between the two countries and requiring the residence country to provide relief (through credit or exemption) for taxes paid in the source country.

For investors and multinational companies using Mauritius as an investment platform, DTAs primarily serve two functions: they reduce withholding tax rates on payments from treaty partner countries below the domestic statutory rate (sometimes to zero), and they provide a legal framework for claiming relief from double taxation through tax credits or exemptions. The practical impact is significant — domestic withholding tax rates on dividends in many African countries range from 10% to 20%, but under Mauritius DTAs these rates are often reduced to 5% or even 0%, resulting in substantial tax savings on cross-border investment flows. To benefit from a DTA, a Mauritius entity must be tax resident in Mauritius (which requires a GBC licence and meeting substance requirements) and must obtain a Tax Residency Certificate (TRC) from the Mauritius Revenue Authority (MRA).

The TRC is presented to the source country's tax authority as proof of Mauritius tax residency when claiming treaty-reduced withholding tax rates. Obtaining a TRC requires the entity to demonstrate that it is managed and controlled from Mauritius, has adequate qualified employees, maintains a physical office, and incurs a minimum level of expenditure in Mauritius. Mauritius's DTA network is particularly valuable for investments into Africa, where many countries impose high domestic withholding tax rates on dividends, interest, and royalties.

By routing investment through a Mauritius GBC, investors can often access significantly reduced withholding tax rates under the applicable DTA. The India-Mauritius DTA deserves special mention as it has historically been one of the most significant tax treaties globally. Signed in 1983, this treaty was the primary conduit for Foreign Direct Investment (FDI) into India for over three decades, attracting billions of dollars in investment flows.

Although the treaty was amended by a Protocol in 2016 — which introduced source-country taxation on capital gains from shares acquired after April 2017 — it remains highly relevant for dividends, interest, royalties, and legacy investments. Similarly, the Mauritius-India DTA has historically been one of the most widely used treaties in the world for investments into India, particularly for portfolio investments and private equity. DTA provisions are complex and treaty-specific — each treaty must be analysed individually for the specific income type, ownership structure, and transaction involved.

Substance and beneficial ownership requirements must be rigorously met to legitimately access treaty benefits. In the post-BEPS environment, the OECD Multilateral Instrument (MLI) has introduced the Principal Purpose Test (PPT) into many of Mauritius's DTAs, requiring that treaty benefits are not available where obtaining the benefit was one of the principal purposes of an arrangement. This makes genuine commercial substance and business rationale more important than ever.