In general, the taxable income of a branch of a foreign company is computed in the same way as that of a resident company. However, a branch may not claim a deduction for interest and royalties paid to its foreign head office. Payments of interest and royalties by a Mauritian subsidiary to its foreign parent, on the other hand, are deductible, although the payments will constitute Mauritian source income subject to Mauritian income tax in the hands of the parent. A branch may deduct management expenses changed to it by a foreign head office, provided the charge is reasonable having regard to the nature and extent of the management services rendered.
