Mauritius: Corporate Climate Responsibility Levy (CCR Levy)

The Finance Act 2024, published on 27 July 2024, has introduced the imposition of the Corporate Climate Responsibility (CCR) Levy, which is intended to support national efforts aimed at protecting, managing, investing in, and restoring Mauritius’ natural ecosystem, as well as addressing the impacts of climate change.

Who is affected?

The CCR Levy applies to companies having a turnover exceeding MUR 50 million (approximately USD 1.1 million based on exchange rate prevailing at the time of writing). The definition of the term “company”, which already included non-resident sociétés, foundations, and trusts under the Income Tax Act 1995, has been extended under the newly introduced Section 50N to include resident sociétés, i.e. limited partnerships.  As a result, the CCR Levy impacts companies incorporated in Mauritius, as well as resident and non-resident limited partnerships, foundations, and trusts.  It is noteworthy that the CCR Levy applies to domestic companies as well as companies set-up in the jurisdiction’s international financial centre, namely holders of a Global Business Licence and Authorised Companies.

For the purposes of assessing the relevance of the CCR Levy to a taxpayer, the term “turnover” has been defined as gross income, including exempt income derived from all sources.  Consequently, even exempt income such as profits or gains on the disposal of securities will be relevant in determining whether the turnover threshold is met.

Implications of the CCR Levy on Effective Tax Rates

The CCR Levy is applicable at the rate of 2% of a company’s chargeable income.  Exempt income, as well as income falling outside the scope of taxation, is not included in a company’s chargeable income and will, hence, not be subject to the CCR Levy.  Companies which claim benefits under the 80% or 95% partial exemption regime will see their effective tax rates increase from 3% to 3.4% and from 0.75% to 0.85% respectively with the imposition of the CCR Levy.  On the other hand, companies not entitled to benefits under the partial exemption regime will see their effective tax rates increase from 15% to 17%.

Companies engaged in the export of goods will, nevertheless, have the largest proportionate impact, with their effective tax rates increasing from 3% to 5%.

The overall impact of the CCR Levy may be mitigated depending on specific circumstances, including the availability of excess foreign tax credits. This should be evaluated on a case-by-case basis.

When does the CCR Levy apply?

The CCR Levy applies as from the year of assessment beginning 1 July 2024. Companies with financial years ending on or after 1 January 2024 should assess their exposure to the CCR Levy accordingly.

If you wish to discuss these topics, please contact:

WTS Tax Consulting (Mauritius) Ltd.