Direct Tax In Mauritius Essay

Abstract

The purpose of the analysis is to study the relationship between direct taxes and indirect taxes and the impact on the economic growth of Mauritius.

Introduction

One of the issues which have arisen throughout history in taxation is the proper combination of direct taxes and indirect taxes. Taxation is often referred as a compulsory contribution to the revenue imposed by the government on employees’ income, business gains, added to the cost of some goods, services and transaction. Failure to pay the MRA by the date imposed by the government the person will be liable to a penalty of 10% of the tax due and to interest rate of 1% per month or part of the month during which the tax remains unpaid. Tax is not considered as a voluntary payment

Corporate taxes are taxes which are charged on companies profit and incomes which are earned by the company as well as gains which are accrued to the company. Tax are hence calculated on profits of the financial year in respect to its accounting period. (Lexicon.ft.com, 2018). In Mauritian context the bodies which are concerned with the Corporate taxes are Companies, Trusts, Trustees of Unit Trust Schemes and Non-resident Sociétés (Partnerships). The tax rates which are charged on company’s profit are 15% for the year starting from 1 July 2008. The chargeable income for a company is calculated by deducting allowable deductions from gross income. A CSR fund equivalent to 2 % of its chargeable income must be set up by each company and Société. A Global(GBL) 1 company, a bank deriving income from non-residents and GBL corporations, an IRS company, a non-resident Société and a foundation, trust or a trustee of a unit trust schemes are not concerned by Corporate Social Responsibility (CSR). The amount which must be paid by the Corporate Social Responsibility(CSR) to Mauritius Revenue Authority(MRA) are 25% for each of the first three quarters and the remaining one quarter must be paid with the annual income tax. Companies whose turnover does not exceed ten million rupees are required to submit its CSR together with its income tax return. The amount will be paid to

The upswing of the Value Added Tax (VAT) around the globe has been considered as the key factor in developments in the world. The advantages of VAT are Avoiding Financial penalties, boosting your business profile, easing business dealings, VAT refunds, reclaiming the past and VAT registration number. (Anon, 2017) Value Added Tax (VAT) is defined according to the Mauritius Revenue Authority(MRA) as a tax charged on goods and services. VAT is liable on all taxable supplies of goods and services made in Mauritius by a taxable person in the course or furtherance of any business carried by him. VAT is also payable on the importation of goods into Mauritius, irrespective of whether the importer is a taxable person or not. The rate of VAT charged in Mauritius is 15 %. (Mra.mu, 2017) The Unified Revenue Board was restructured in 1 July 1999 by the Ministry of Finance into Mauritius Revenue Authority by amendments which was carried on the Unified Revenue Act 1983. The responsibility of the Mauritius Revenue Authority(MRA) was to monitor, coordinate and supervise the activities of the revenue departments. The MRA had the responsibility to provide an equitable, methodical and constructive administration of taxes and duties imposed by the revenue Acts. (Anon,