Income tax is calculated on the profit for the year as adjusted for income tax for the Bank’s purposes as follows:
However, taxable income above MUR 1.5bn may be subject to graduated tax rate provided as per table below:
| Taxable income | Rate of income tax |
|---|---|
| Up to MUR 1.5bn | 5% |
| Exceeding MUR 1.5bn up to amount equivalent to the taxable income of the base year | 15% |
| Amount exceeding taxable income of base year | 5% |
As per Income tax Act, ‘base year’ refer to taxable profit of year of assessment 2017/18, that is, financial year ended 30 June 2017. For the year ended 30 June 2020, the Bank has complied with the prescribed conditions and has applied the graduated tax rate. For the year under review, the chargeable income of the Bank was below the threshold of MUR 1.5bn.
The income tax rate applicable for 2019 was 15%.
Up to 30 June 2019, the Bank, was entitled to a tax credit equivalent to 80% of Mauritius tax payable in respect of its foreign source income (Segment B) thus reducing its maximum effective tax rate on segment B to 3%.
Income tax of the subsidiaries is calculated at the rate of 15% (2020 and 2019: 15%)
The Corporate Social Responsibility (‘CSR’) was legislated by the Government of Mauritius in July 2009. In terms of the legislation, the Bank is required to allocate 2% of its chargeable income under Segment A (‘Resident’) of the preceding financial year to Government-approved CSR projects. Where the amount paid out of the CSR fund is less than the amount provided under the fund, the difference shall be remitted to the Mauritius Revenue Authority at the time of submission of the income tax return on the year under review.
Special levy on banks was amended under the Finance Act 2018 and 2019 and is now governed under the VAT Act. Every bank shall in every year be liable to pay the taxation authorities a special levy calculated at 5.5% where leviable income is less than or equal to MUR 1.2bn or at 4.5% where leviable income is greater than MUR 1.2bn. Leviable income applies to banking transactions of Segment A and is defined as the sum of net interest income and other income before deduction of expenses as per VAT act.
A communique issued by BOM during the year under review, clarified that Special Levy should be treated as a tax expense. Thus, the Bank reclassified the amount recognised in respect of Special Levy from ‘Other operating expenses’ to ‘Tax expense’ in the statement of profit or loss and other comprehensive income. The amount recognised for Special Levy has also been reclassified from ‘Other liabilities’ to ‘Current tax liabilities’ in the statement of financial position. These line items in the statement of profit or loss and other comprehensive income for the years ended 30 June 2019 and 2020 and in the statement of financial position as at 30 June 2019 and 2020 were also restated to reflect this reclassification as follows:
Prior to 30 June 2019, deferred tax was calculated on all temporary differences under the liability method at the rate of 17% for Segment A and 3% for Segment B. Following the enactment of the new tax rates in August 2018, deferred tax is calculated at the rate of 7% for Segment A and 5% for Segment B.