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Mauritius tax update: The MRA issues a Statement of Practice on Trusts and Foundations

Insight 8 September 2021

Mauritius tax update: The MRA issues a Statement of Practice on Trusts and Foundations

Read our latest briefing note on the Statement of Practice recently issued on Trusts and Foundations in response to amendments brought by the Finance (Miscellaneous Provisions) Act 2021 to the Income Tax Act 1995.

The Mauritius Revenue Authority (“MRA”) has issued a Statement of Practice (“SOP”) on 24 August 2021 on Trusts and Foundations. This is in response to the amendments brought by the Finance (Miscellaneous Provisions) Act 2021 (the “Finance Act 2021”) to the Income Tax Act 1995 (“ITA”).

Notwithstanding the changes brought by the Finance Act 2021 pursuant to which applicable Trusts and Foundations will no longer be permitted to file declaration of non-residence, the SOP clarifies that Trusts and Foundations which have their central management and control outside of Mauritius will not be subject to tax on their foreign source income in Mauritius.

The conditions in respect of central management and control of trusts and foundations in Mauritius are set below:

  1. The trust is administered in Mauritius and a majority of the trustees are resident in Mauritius;
  2. The settlor of the trust was resident in Mauritius at the time the instrument creating the trust was executed or at such time as the settlor adds new property to the trust; and
  3. A majority of the beneficiaries or the class of beneficiaries appointed under the terms of the trust are resident in Mauritius.
  1. The founder is resident in Mauritius; and
  2. A majority of the beneficiaries appointed under the terms of a charter or will are resident in Mauritius.

Once it is established that a trust or foundation holds its central management and control in Mauritius by meeting all the conditions set out by the SOP, as explained above, the worldwide income of such trust or foundation will be taxed at 15% in Mauritius. Otherwise, the trust or foundation will be taxed solely on its Mauritian source income at 15%.

It should be noted that whilst a trust or a foundation may be deemed to be a non-resident should it not satisfy any one of the conditions listed above, it will be required to file an income tax return annually with the tax authorities.

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Should you require our expert services and need assistance on the implications of above new developments, we would be delighted to speak with you to discuss how Sanne can assist. Please contact Rubina, Bimal or Varounen directly.

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Rubina Toorawa Head of Sanne Mauritius - Mauritius
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