Barbados Mauritius Tax Treaty
The Barbados Mauritius Tax Treaty brings together two of the world’s leading offshore jurisdictions from opposite sides of the globe. Both nations have extensive international tax treaty networks and the Barbados Mauritius Treaty creates opportunities for investors and offshore businesses in both jurisdictions. Each country can now access the partner country’s treaty network to further increase the international reach and options available.
Mauritius serves as an important gateway into Africa, South Asia and the Middle East with more than two dozen tax treaties in place with countries in these regions, providing important access to new areas for Barbados companies. Barbados in turn, has a strong tax treaty network in the Americas.
Barbados and Mauritius have implemented both a Bilateral Investment Treaty (BIT) and a Double Taxation Agreement (DTA).
Barbados Mauritius Bilateral Investment Treaty
The main purpose of the Barbados Mauritius Bilateral Investment Treaty (BIT) is to encourage investors in one country to invest in the other country by creating favourable conditions for investment and providing for the reciprocal protection of such investments, with the goal of increasing prosperity in both countries.
The BIT offers strong protection for foreign direct investment made by residents of one nation in the other nation. It provides protection from expropriation and includes a number of fair treatment clauses. The BIT also ensures that compensation would be offered in the event of a loss of property and provides for international arbitration to settle unresolved disputes between affected parties. The Barbados Mauritius Bilateral Investment Treaty also provides for the transfer of investments and returns.
Barbados Mauritius Double Taxation Agreement
Double Taxation Agreements (DTAs) are established to prevent double taxation between partner countries. This helps minimize the international tax burden that investors and companies face. Through the DTA, a country will allow the tax payable in the partner country to be deducted as a tax credit in the home country in order to reduce the international tax payable and to prevent the same profits being taxed twice.
In addition, DTAs set out the maximum withholding taxes that can be charged by the partner countries.
The Barbados Mauritius Tax Treaty applies withholding taxes as follows:
• Dividends: The maximum withholding tax charged shall not exceed 5%. Neither Barbados nor Mauritius charges withholding taxes on dividends, so the rate is effectively 0%.
• Interest: The maximum withholding tax charged shall not exceed 5%.
• Royalties: The maximum withholding tax charged shall not exceed 5%.
Double taxation is avoided as follows:
• Tax payable in Mauritius on profits or income from sources within Mauritius shall be allowed as a credit against any Barbados tax computed by reference to the same profits or income.
• In the case of a dividend paid by a company that is a resident of Mauritius to a company that is a resident of Barbados and which holds directly at least 5% of the capital of the company paying the dividend, the credit shall take into account the Mauritius tax payable in respect of the profits out of which such dividend is paid.
• Where a resident of Mauritius derives income from Barbados, the Barbados tax payable may be credited against the Mauritius tax imposed on that resident.
• Where a Barbados company pays a dividend to a company that is a resident of Mauritius and controls at least 5% of the capital of the company paying the dividend, the credit shall take into account the Barbados tax payable by the Barbados company in respect of the profits out of which such dividend is paid.
Barbados Offshore Tax Rates
Barbados offshore companies benefit from very low tax rates. Tax rates for International Business Companies, Societies with Restricted Liability and International Banks start at 2.5% and are reduced on a sliding scale down to 0.5%. Trusts are exempt from taxation.
Capital gains are also tax exempt. In addition, there are no withholding taxes on dividends, interest and royalties.
Barbados Offshore Company Types
Barbados offers a number of tax efficient offshore vehicles.
These Barbados company types include:
The Tax Treaty Advantage
Barbados’ tax treaty network has more than 30 treaty partners which benefits investors and businesses. This expansive treaty network opens doors and creates opportunities, offering access to markets worldwide. These treaties create a low tax environment and offer reciprocal investment protection between partners, which in turn facilitates international business and the flow of capital.
The Barbados Mauritius Tax Treaty is especially useful for investors in both jurisdictions as each country’s network is quite large and the treaty offers investors access to additional jurisdictions in the partner country’s respective sphere of influence.