Mauritius 2019 Budget Speech - Academy of Tax Law

The Prime Minister of Mauritius presented the Mauritian Budget Speech for the 2019/20 year yesterday. The important tax proposals, insofar as they are relevant for South African tax residents looking to use Mauritius as a jurisdiction for tax planningTax planning is the process of organising and structuring one’s financial affairs in a manner that legally minimises tax liabilities while ensuring compliance with relevant tax laws. The primary objective of tax planning is to reduce the amount of taxes paid, optimise the use of available tax benefits, and preserve wealth. It can be applied at various levels, including personal..., may be summarized as follows-

An amendment to the definition of the tax residency of companies whereby any Mauritian incorporated company that has its “Central Management and Control” (this is not quite the same as the SA criteria of “Place of Effective Management”) outside of Mauritius will not be considered to be a Mauritian tax resident
For Mauritian companies that wish to rely on the 80{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} partial exemption introduced effective 1 January 2019 (“the Partial Exemption”), detailed substance requirements will be defined (details not yet released)
Where a company outsources it core income generating activities, to qualify for the Partial Exemption such company will need to demonstrate that it adequately monitors such outsourcing. In addition such outsourcing must be in favour of service providers that attends to such outsourced activities from within Mauritius
Activities that qualify for the Partial Exemption will now include leasing and provision of international fibre optic capacity, reinsurance and reinsurance broking, as well as financing and service activities relating to aircraft and aviation
Controlled Foreign Company rules are to be introduced
Application of OECD transfer pricing guidelinesThe OECD Transfer Pricing Guidelines serve as a critical framework for multinational enterprises (MNEs) and tax administrations worldwide. They provide detailed principles for the pricing of intra-group transactions to ensure that profits are allocated fairly across jurisdictions, based on the arm’s length principle. In essence, these Guidelines are instrumental in preventing tax base erosion and profit shifting by MNEs. The... are not formally part of any Mauritian tax legislationTax laws form the backbone of any nation’s revenue system, setting the rules that govern how individuals and corporations contribute financially to support government functions. These laws define the types of taxes, the applicable rates, and the regulations regarding payment and compliance. They also outline the rights and obligations of taxpayers, ensuring a balanced and fair approach to funding public..., although the MRA has stated that it is adopting these rules. To date the MRA applies a relatively simple “arm’s length test” in section 75 of the Income taxIncome Tax is a direct levy imposed by governments on the income generated by individuals, corporations, and other entities within a specific jurisdiction. It serves as a major source of revenue for governments and funds various public expenditures, such as infrastructure projects, healthcare, education, national security, and welfare programs. The tax is generally calculated as a percentage of the taxable... Act to transfer pricingTransfer pricing is a fundamental concept in international taxation that defines the pricing methods and rules applied to transactions between related entities within a multinational enterprise (MNE). In the context of tax regulations, it governs how prices for goods, services, or intangibles (such as intellectual property) are set when these items are exchanged between different branches, subsidiaries, or affiliates of... disputes. This section is to be amended to improve clarity and no doubt expand the scope of its application
The process, rules and guidelines for eligibility and more efficient issuing of Occupation Permits to foreigners who wish to live and work in Mauritius will be revised
Companies incorporated before 30 June 2025 with a view to operating an e-commerce platform in and from Mauritius will be granted a 5 year tax holiday
Companies engaged in innovation-driven activities will be granted an 8 year tax holiday on profits derived from intellectual property developed in Mauritius, subject to substance of activity requirements in line with international guidelines
Creation of crowd funding as a new recognized licensed activity
Introduction of a Scheme for the Headquartering of e-commerce activities in Mauritius
The introduction of an “umbrella license” for Wealth Management Activities
Introducing an attractive tax regime to promote Real Estate Investment TrustsA comprehensive look at trusts in international tax law, including definitions, practical examples, key cases, and synonyms. (REITs)in Mauritius

Mark Korten will be presenting a Webinar in July 2019 that will discuss the above Budget Proposals in more detail together with a broader analysis of using Mauritius as a suitable jurisdiction for SA residents that wish to structure wealth or conduct trading activities outside of South Africa, having regard to the latest SA tax lawsTax laws form the backbone of any nation’s revenue system, setting the rules that govern how individuals and corporations contribute financially to support government functions. These laws define the types of taxes, the applicable rates, and the regulations regarding payment and compliance. They also outline the rights and obligations of taxpayers, ensuring a balanced and fair approach to funding public.... A separate invitation regarding this Webinar will follow shortly. He will also be available to consult in Johannesburg and Cape Town from 13 to 23 July.

CONTACT: Office@TaxRiskManagement.com for reservations.

*For clarity, the term Double Tax TreatyA Double Taxation AgreementA Double Taxation Agreement (DTA), also known as a Double Taxation Treaty (or a Tax Treaty), is an international tax treaty between two or more countries that aims to prevent individuals or businesses from being taxed twice on the same income. With globalisation and the increase in cross-border economic activities, DTAs have become essential tools for promoting trade, investment, and... (DTAA Double Taxation Agreement (DTA), also known as a Double Taxation Treaty (or a Tax Treaty), is an international tax treaty between two or more countries that aims to prevent individuals or businesses from being taxed twice on the same income. With globalisation and the increase in cross-border economic activities, DTAs have become essential tools for promoting trade, investment, and...), also known as a Double TaxationDouble Taxation occurs when the same income or financial transaction is taxed twice, typically in different jurisdictions. It can arise in two primary contexts: economic double taxation, where the same income is taxed twice in the hands of different taxpayers, and juridical double taxation, where the same taxpayer is taxed on the same income in more than one country. Double... Treaty (or a Tax TreatyA Double Taxation Agreement (DTA), also known as a Double Taxation Treaty (or a Tax Treaty), is an international tax treaty between two or more countries that aims to prevent individuals or businesses from being taxed twice on the same income. With globalisation and the increase in cross-border economic activities, DTAs have become essential tools for promoting trade, investment, and...), is an international

Related Articles