Mauritius will subject all offshore companies to income taxes at a 15% rate starting in July 2003, regardless of when the companies were incorporated.

The country has been under fire to impose real taxes on holding companies based in Mauritius in order to justify the claim that these companies qualify for benefits under tax treaties that Mauritius has with other countries. A company must be a “tax resident” of Mauritius to qualify for treaty benefits. Mauritius will continue after July 2003 to allow taxes paid to other countries to be credited against the Mauritius tax, but the tax can only be reduced by 80% by such credits, leaving a net tax to pay of least 3%.

Mauritius has been used as a beachhead for investments into India, Pakistan and China.