Foreign investments

Mauritius Economic Development Council clarifies taxation of foreign investments

The Mauritius Economic Development Council has decided to insure South Africans with Mauritian trusts, in response to the confusion and concern of its members and clients over the taxation of foreign investments in the island country.

The EDB responded to an article published on BusinessTech entitled: “Bad news for South Africans with cash stshed in Mauritius”. In the article, it is stated that among others, the Mauritius Revenue Authority (MRA) targets foreign trusts which are no longer exempt from income taxes.

The full answer to the article is contained below:

The Economic Development Board of Mauritius (EDB) says the aforementioned article is not factually and technically accurate, and may confuse readers as it ignores the current state. of our legislation and our amendments as promulgated.

Following the changes made to the Income Tax Law of 1995 by the Finance Law 2021 in order to comply with OECD standards, the tax administration published a Practice Notice (SOP), with the reference SP 24/21, establishing the concept of centralized management and control when:

  1. The trust is administered in Mauritius and the majority of the trustees reside in Mauritius;
  2. The settlor of the trust resided in Mauritius at the time of creation; and
  3. The majority of the beneficiaries of the trust reside in Mauritius.

Once it has been established that a trust or foundation has its central management and control outside Mauritius by fulfilling all the conditions set out by the SOP, it will be taxed at 15% only on its income from Mauritian source. Therefore, under the SOP, it is clear that foreign trusts are not subject to foreign source income tax.

Changes in our tax laws relating to trusts and foundations do not affect or affect other tax authorities or reserve banks.

In addition, the article links anti-money laundering / combating the financing of terrorism (AML / CFT) issues with tax issues, which is not correct.

  • Mauritius is not on any Organization for Economic Co-operation and Development (OECD) list in tax matters;
  • The changes in trust legislation have no connection with the Financial Action Task Force (FATF);
  • There is no provision in our tax laws to the effect that any income that is not exempt must be disclosed to other authorities; and,
  • The information exchange framework between Mauritius and South Africa has not in any way been altered by recent legislative changes.

In addition, Budget 2021/2022 proposed a series of amendments to improve our AML-CFT framework, and following the work undertaken by the competent authorities in Mauritius, the FATF, during its plenary session in June 2021, endorsed the substantial and rapid progress made. by Mauritius to consolidate the jurisdiction’s AML / CFT regime and justified an on-site inspection to validate it.

The FATF on-site assessors were in Mauritius from September 13-15, 2021.

It should be noted that Mauritius significantly completed the FATF action plan well ahead of the agreed deadline of January 2022, and this endorsement by the FATF is testament to the multitude of bold steps taken by the Government of Mauritius, to honor its commitment and adhere to the highest international standards in the fight against money laundering and terrorist financing.

Read: Bad news for South Africans with money hidden in Mauritius

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