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A dividend distribution from a Mauritius company is a decision of the directors before it is a payment. Profits sitting in the bank account do not become a dividend until the board has approved it, tested it and recorded it. This page follows the path in order: the conditions, the documents, the payment and the tax treatment on each side.
It is general information, not advice. Whether a particular payment is safe and how it is taxed depends on the company's accounts, its licence and its shareholders, so confirm the analysis with an adviser before you pay.
What a dividend is, and who decides
A dividend is a distribution of company value to shareholders in their capacity as shareholders. It is not a salary, a fee or a loan, and it should not be dressed up as one. If you are unsure which route fits, read how to pay a director properly before choosing.
In a standard private company the directors decide whether to declare a dividend and how much to pay. Shareholders usually cannot force a payment, and the constitution of the company may add conditions, for example a different entitlement for different classes of shares. Always read it first.
Directors act under their statutory obligations when they decide. They must act in good faith, in the interests of the company, and with care. The wider framework is explained in directors' duties under Mauritian company law.
Conditions before declaring a dividend
Three questions come before any resolution.
- Does the company have distributable value? Look at the latest annual financial statements and at recent management figures, not at cash alone. A healthy bank balance can hide unpaid tax, payroll liabilities or supplier invoices.
- Does the constitution allow it? Share classes, preference rights and any shareholder agreement can limit or reorder payments.
- Will the company still be able to pay its debts afterwards? This is the solvency test. The directors apply it before the payment and must be satisfied on reasonable grounds. The mechanics have their own page: what the solvency test is and when directors must apply it. This guide does not repeat them.
If any answer is uncertain, delay the declaration. A dividend paid in breach of the conditions can expose the directors personally and may be recoverable from shareholders in some circumstances.
Dividend distribution in a Mauritius company: step by step
- Review the numbers
Check the latest accounts, current liabilities and any tax or payroll amounts still due.
- Apply the solvency test
Directors form a view on the company's ability to meet its debts and record the basis for it.
- Pass the board resolution
Declare the amount, the record date and the payment date, by meeting or in writing.
- Notify shareholders
Tell each shareholder what they will receive and when.
- Pay and record
Transfer the funds, update the accounts and file the paper trail.
1. Review the numbers
Ask whoever keeps the books for a short note: profit after tax, retained earnings, amounts owed to the tax authority and to employees. Tax and contribution balances, including those described in payroll in Mauritius, rank ahead of the shareholders.
2. Apply the solvency test
Directors should keep a short working paper on how they reached their view: the figures they used, the forecast period they considered, and who prepared it. A bare statement that the company is solvent is weak evidence if a liquidator later asks.
3. Pass the board resolution
The decision is taken either at a meeting or by written resolution. Both are covered in board meetings of a Mauritian company and board and written resolutions. For a single-director company, a signed written decision is usually enough, but it must still exist and be dated.
A well-drafted resolution states:
- the total amount and the amount per share;
- the class of shares concerned, if there is more than one;
- the date on which entitlement is fixed and the payment date;
- the statement that the directors have applied the solvency test and are satisfied;
- who is authorised to give the payment instruction.
If you hold a meeting, follow the format in how to write board minutes. If you decide without one, the approach in written resolutions applies.
4. Notify shareholders
Send each shareholder a short advice showing the number of shares held, the gross amount and the date of payment. This also helps them with their own tax records abroad, where the treatment of a Mauritian dividend may differ.
5. Pay and record
Pay from the company bank account to the account of the registered holder. Avoid paying a third party unless the shareholder has instructed this in writing. Record the payment in the books against the dividend account, not as an expense.
Documents to prepare and keep
Treat the following as the minimum file for each distribution.
- Latest financial statements or management accounts used for the decision
- Working paper supporting the solvency view
- Signed board resolution or minutes
- Extract of the register of members showing who held the shares on the entitlement date
- Dividend advice sent to each shareholder
- Bank evidence of payment
- Updated ledger entries and, where relevant, the year-end note on distributions
These items belong with the other statutory registers and records. Retention periods are explained in company records: what to keep and for how long. Where a registered agent or a licensed provider keeps your records, make sure the dividend file is included in what it holds.
How the dividend is taxed
Tax depends on who pays, who receives and where they are resident. The key rules below come from the Income Tax Act as consolidated and published by the Mauritius Revenue Authority (MRA).
Dividends from a resident company
Dividends paid by a company resident in Mauritius are exempt from income tax for the person who receives them (Second Schedule, Part II, Sub-part B, item 1). The Act does not provide for any withholding on these dividends. The company therefore does not deduct tax when it pays, and the shareholder does not report the dividend as taxable income in Mauritius.
That is separate from the tax the company has already borne on its profits. For the underlying position, see how a Mauritius company is taxed on its profits. For the general withholding regime on other payments, see withholding tax on payments made by a Mauritius company.
Residence matters
A company incorporated in Mauritius is treated as resident, and so is a company whose central management and control is in Mauritius (section 73). Under section 73A, a company incorporated in Mauritius is treated as non-resident if it is centrally managed and controlled outside Mauritius, but it must still file an income tax return under section 116.
So a Mauritian company run from abroad should check its residence before assuming how its dividends are treated. If you manage the company from another country, see for example running a Mauritius company from the United Kingdom for how management location raises separate questions.
Dividends between Global Business Licence holders
Dividends paid by a company holding a Global Business Licence to another company holding a Global Business Licence are exempt (Sub-part B, item 2). The exemption turns on the status of both companies, so check the licence position of the payer and the recipient at the date of payment.
Foreign dividends received by a Mauritius company
When a company receives a dividend from abroad, a partial exemption applies: 80 % of foreign-source dividends are exempt. This holds provided that the dividend has not been deducted in the source country and that the company meets the prescribed substance conditions. Banks within section 44C are outside this relief. The remaining part is taxable, and the substance conditions are a separate subject handled elsewhere.
The shareholder's own country
Mauritian exemption does not decide what happens abroad. A shareholder resident in another country may be taxed there on the dividend, with or without relief for any tax already paid. That is a question for the shareholder's own adviser.
Is the dividend paid by a company resident in Mauritius?
Are both the payer and the recipient Global Business Licence holders?
Is the company incorporated in Mauritius but managed and controlled abroad?
Dividend or something else?
Some payments look like dividends but are not. Mixing them up causes tax and company law problems.
| Payment | What it is | Where to read more |
|---|---|---|
| Dividend | A distribution to shareholders, decided by the board after the solvency test | This page |
| Director's fee or salary | A payment for services, subject to payroll rules | Director remuneration |
| Loan to a shareholder-director | A credit that must be repaid and documented | Loans between a company and its directors |
| Repayment of share capital | A different corporate action with its own formalities | Ask an adviser |
A regular transfer to a shareholder with no resolution behind it is the usual red flag. If the money has already left the account, correct the paperwork promptly and talk to an adviser rather than backdating a resolution.
Common mistakes
- Paying first, deciding later. A resolution dated after the transfer does not cure the problem and can look like backdating.
- Using cash as the test. Solvency looks at liabilities and ability to pay as they fall due, not at the balance on the day.
- Ignoring share classes. Preference or restricted shares can change who gets what.
- Forgetting the register. The payment must go to the persons entitled on the record date.
- Missing the dividend in the year-end file. Auditors and the MRA will ask what supports the distribution. If your company is subject to an audit, see audit requirements.
FAQ
How do I declare a dividend in Mauritius?
The board passes a resolution, at a meeting or in writing, after it has satisfied itself on the solvency test. The resolution should state the amount, the shares concerned, the record date and the payment date. Minutes or the signed written decision are then filed with the company's records.
Does a Mauritius company deduct tax when it pays a dividend?
For dividends paid by a company resident in Mauritius, the Income Tax Act exempts the recipient and does not provide for a withholding on those dividends. Different questions arise for other payments, such as royalties or fees, and for shareholders taxed abroad. For those, take advice on the specific situation.
Can a sole director declare a dividend alone?
Yes, if the constitution allows the board to act through one director, the decision is usually a signed written resolution. The solvency test and the paperwork still apply in full. The page on compliance for a small private company with one director covers that setting.
Can I pay a dividend if the company made a loss this year?
It depends on the company's overall position, not only on the year's result. Retained value from earlier years may support a payment, but the directors must still be satisfied on solvency. When accounts show a loss, take specific advice before paying.
Is the dividend taxable for a foreign shareholder?
In Mauritius, a dividend from a resident company is exempt in the recipient's hands. Taxation in the shareholder's country of residence is a separate matter that follows that country's law.
What if a dividend was paid without a resolution?
Regularise it quickly: document what happened, have the board consider the position now, and ask an adviser how to treat the payment in the accounts. Do not backdate documents.
Who can help me set up the process?
A corporate services provider licensed by the Financial Services Commission can prepare resolutions and registers. You can also send a request through the contact form and your enquiry will be passed to a licensed provider.