The Convention with Mauritius scheduled to this Order replaces the Arrangement which is scheduled to the Double Taxation Relief (Taxes on Income) (Mauritius) Order 1947. It provides that certain trading profits not arising through a permanent establishment, pensions (other than Government pensions) and the earnings of temporary business visitors are (subject to certain conditions) to be taxed only in the country of the taxpayer's residence. Shipping and air transport profits are to be taxed only in the country in which the place of effective management is situated. Government salaries and pensions are normally to be taxed by the paying Government only. The remuneration of visiting teachers and certain payments made to visiting students are (subject to certain conditions) to be exempt in the country visited.

Where income continues to be taxable in both countries, relief from double taxation is to be given by the country of residence of the taxpayer. The credit to be given in the United Kingdom for tax payable in Mauritius is to include credit for tax spared under certain provisions of Mauritian law.

Where a United Kingdom company pays a dividend to a resident of Mauritius controlling less than 10 per cent of the voting power in the United Kingdom company, the recipient of the dividend will be entitled to the tax credit which would be payable to a United Kingdom resident individual less a sum of not more than 15 per cent of the aggregate amount of the dividend and the credit. Dividends paid by Mauritain companies to residents of the United Kingdom will be exempt from any Mauritius tax which might be charged in addition to tax charged on the company's income or profits represented by the dividends.

Interest derived by the Government of one of the Contracting State, by a Government agency or by a bank will be exempt from tax in the source country. The rate of tax in the source country on royalties flowing to the other country is, in general, not to exceed 15 per cent.

There is provision for the taxation of capital gains on immovable property by the country in which the property is situated. Capital gains arising from the disposal of movable property are normally to be taxed only in the country of the taxpayer's residence unless they arise from the disposal of assets of a permanent establishment or fixed base which the taxpayer has in the other country.

There are also provisions safeguarding nationals and enterprises of one country against discriminatory taxation in the other country and for the exchange of information and consultation between the taxation authorities of the two countries.

The Convention is to take effect in the United Kingdom for the tax year or financial year beginning in April 1981 and subsequent years.