For most of two decades, Mauritius was described to European investors in one sentence: it is where you put the company that holds your African assets. The sentence was doing a lot of work. It carried an implicit promise of a low effective rate, a wide treaty network into the continent, and a light administrative burden. Each of those three has been rewritten, and the pitch that survives is narrower and more specific than the one still circulating.
Mauritius is not finished as a jurisdiction, and this is not an article arguing that it is. It is an article about which operations it still improves and which ones it now only complicates. The distinction matters because the second category has grown, and because a structure that no longer earns its cost is not neutral. It has an annual administrative charge, a substance obligation and an explanation to give.
What changed, and why the old description stopped working
The rate is still 15 per cent, and companies engaged in the export of goods are taxed at 3 per cent, as the Mauritius Revenue Authority publishes. What changed is everything around that figure.
The regimes that produced very low effective rates were replaced by the Finance Act 2018, with effect from 1 January 2019, by a partial exemption that is conditional on substance rather than on licence category, the older exemption tied to holding a Global Business Licence having been left to run only until 30 June 2021. A Corporate Climate Responsibility Levy was added at 2 per cent of chargeable income under section 50O of the Income Tax Act, applying from the year of assessment commencing 1 July 2024 and not payable where the company’s turnover does not exceed 50 million rupees. And a Qualified Domestic Minimum Top-up Tax now applies to members of a multinational enterprise group with annual revenue of 750 million euros or more in at least two of the four preceding fiscal years, under which a covered person is liable where the combined effective tax rate determined for all covered persons in the fiscal year is less than 15 per cent, payable in respect of the year of assessment commencing 1 July 2025 and every subsequent year.
Those three changes point the same way. The floor rose, the conditions hardened, and the benefit stopped being automatic. A group that has not revisited its Mauritian file since the old regime was withdrawn is almost certainly describing it to its own board in terms that are no longer accurate.
The partial exemption, and the condition that carries it
The exemption itself is straightforward. Under item 6 of Sub-Part B of Part II of the Second Schedule to the Income Tax Act, 80 per cent of foreign source dividend derived by a company, other than a bank referred to in section 44C, is exempt, provided the dividend has not been allowed as a deduction in the country of source and the company satisfies the prescribed conditions relating to the substance of its activities. The same 80 per cent applies to interest derived by a company outside a list of financial exclusions, with 95 per cent for interest derived by a collective investment scheme or closed end fund licensed or approved by the Financial Services Commission.
Applied to a 15 per cent rate, an 80 per cent exemption leaves an effective 3 per cent on the qualifying foreign dividend. That remains an attractive number in isolation, and it is the number most memoranda quote.
The conditions are where the work sits, and they are not the same for every item. Regulation 23D of the Income Tax Regulations 1996 applies a three part test to the interest item and to the licensed activities: the company must carry out its core income generating activities in Mauritius, must employ directly or indirectly an adequate number of suitably qualified persons to conduct those activities, and must incur a minimum expenditure proportionate to its level of activities. For foreign dividend it prescribes a different condition, that the company complies with its filing obligations under the Companies Act or the Financial Services Act and has adequate resources for holding and managing share participations. There is a further point that is easy to miss and expensive to miss. Section 77(4)(a) denies a credit for foreign tax on foreign source income in respect of which a partial exemption has been claimed under Part II of the Second Schedule. The exemption and the credit are alternatives, not a stack, so a group receiving dividends that have already borne substantial withholding at source may be better off claiming the credit and worse off claiming the exemption.
What fifteen per cent means once the top-up tax is in the picture
For a group inside the scope of the minimum tax rules, the partial exemption does something it was never designed to do. It lowers the effective rate below 15 per cent, and the top-up tax then collects the difference.
That is not a defect in the Mauritian rules. It is the design of the international regime, and Mauritius has implemented its own domestic top-up so that the difference is collected locally rather than by another jurisdiction. But it changes the answer to the question a European group is actually asking. For an in-scope group, the Mauritian partial exemption on foreign dividends is close to economically irrelevant, and the cost of maintaining the substance that supports it is not.
For a group below the threshold, the exemption still works as written. The practical consequence is that the same structure now has two very different values depending on the size of the group holding it, and any adviser quoting an effective rate without asking that question is quoting a number that may not apply.
Read from Europe, the treaty gap is decisive
There is no double taxation treaty between the Netherlands and Mauritius. Mauritius does not appear at all on the Dutch Ministry of Finance’s overview of treaties in the field of direct taxes as at 1 July 2026, neither as in force nor as signed and awaiting entry into force. Nor is Mauritius designated on the Dutch list of low taxed and non-cooperative jurisdictions in force from 1 January 2026, so the Dutch conditional withholding tax under the Wet bronbelasting 2021 does not attach to a Mauritian recipient on that ground.
The second point is worth stating because it is often assumed the other way. Mauritius is not a blacklisted counterparty from a Dutch perspective, nor from a European one, appearing in neither annex of the common EU list of third country jurisdictions for tax purposes as it stood on 17 February 2026. It is simply a jurisdiction with which there is no bilateral relief, which is a different and more mundane problem.
For a European group, that gap decides the shape of the structure. A Mauritian company inserted between a Dutch parent and an African operating company adds a layer with no treaty relationship upward. Dividends paid out of Mauritius are exempt income under the Second Schedule, so the layer is not itself costly on distribution, but neither does it improve the position on the way up. Whatever the Mauritian company is doing for the group, it is not improving the European end of the chain.
Where Mauritius still earns its place
Three cases, in our practice, still justify it.
The first is genuine regional management. A group that actually runs its African operations from Port Louis, with people who live there and decisions that are taken there, has a Mauritian company that satisfies the substance conditions as a byproduct of doing business rather than as an exercise. That group gets the partial exemption honestly, and it gets a jurisdiction with a functioning financial services regulator and a legal system its counterparties can read.
The second is fund structuring. The Financial Services Commission’s collective investment framework is mature, the 95 per cent exemption for interest derived by a licensed collective investment scheme or closed end fund is written for it, and investors from multiple countries are used to seeing Mauritian vehicles in African funds. The infrastructure exists and is not easily replicated.
The third is access to particular African treaty positions that Mauritius holds and a European jurisdiction does not, where the operating country’s own rules make the difference material and the Mauritian company is real. That case is narrower than it was, because Mauritius adopts the principal purpose test alone in its covered tax agreements under Article 7 of the Multilateral Instrument, and that test addresses exactly this arrangement, but it has not disappeared.
Where it now adds nothing
It adds nothing to a two-country structure. If the assets are in one African jurisdiction and the shareholders are in Europe, a Mauritian company in the middle is an extra set of accounts, an extra audit, an extra substance obligation and an extra thing to explain, in exchange for a benefit that either the top-up tax collects or the treaty article denies.
It adds nothing where the group’s only reason for it is the rate. That was the reason for most of the structures we are asked to review, and it is the reason that has been legislated away, both in Mauritius through the substance conditions and internationally through the minimum tax.
It adds nothing where the Mauritian company cannot pass the substance test on its own facts. A company whose core income generating activities are performed elsewhere does not get the exemption on the items that carry that test, and a group relying on a service provider’s staff should note that regulation 23D requires that the economic substance of service providers is not counted multiple times by multiple companies when evidencing their own substance in Mauritius.
Two structures, one of which we would not build
We would build the following. A European group with operations in four African countries, a real regional office in Mauritius employing its own senior people, a Mauritian company that holds the African subsidiaries and genuinely manages them, and a Dutch parent above it holding a qualifying participation of at least 5 per cent of the nominally paid up capital under article 13 of the Wet op de vennootschapsbelasting 1969, so that dividends and gains reach the shareholders under the participation exemption. Every layer does something.
We would not build the following, and we have unwound versions of it. The same group without the regional office, where the Mauritian company exists because a memorandum written in 2014 said it should, its board is provided by a service provider, its accounts show a management fee out and a dividend in, and the group is large enough to be in scope of the minimum tax. That structure costs money every year and returns nothing. The correct advice is to collapse it, and the correct time to have done so was before the shares appreciated.
How to decide
Ask what the Mauritian company would do if it were the only company in the group. If the answer describes actual work performed by actual people in Mauritius, it belongs in the structure and the partial exemption is available on its own terms. If the answer is a rate, the structure is being defended by a number that the minimum tax or the substance conditions have already taken away.
Then ask the European question separately. There is no treaty between the Netherlands and Mauritius, so nothing the Mauritian company does improves the position between Mauritius and the shareholders. If the group needs a European holding, it needs one for European reasons, and the Mauritian company has to justify itself on the African side alone. Very few of the structures written a decade ago were designed to answer both questions. Most were designed to answer neither.
This article is informational and does not constitute tax or legal advice. The treatment of any structure depends on its facts and on the law of each jurisdiction involved. Each engagement is subject to scope and applicable regulation.