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 planning, 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 guidelines are not formally part of any Mauritian tax legislation, 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 tax Act to transfer pricing 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 Trusts (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 laws. 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.
