MAURITIUS Law and Practice Contributed by: Johanne Hague, Ashwin Mudhoo, Medina Torabally and Yushrah Bayjou, CMS Prism in association with CMS
chargeable income, based on their tax rate. However global business entities (which includes foundations and trusts), companies that benefit from tax holidays, and entities deriving income that is exempt from income tax, are exempt from the payment of the fair share contribution. Tax Residency Whether a trust or a foundation falls within the Mau - ritius tax net ultimately depends on whether it is tax- resident in Mauritius. A trust is resident if it is administered in Mauritius and a majority of the trustees are resident in Mauritius, or if the settlor of the trust was resident at the time the instrument creating the trust was executed. A founda - tion is considered to be resident if it is registered in Mauritius or has its central management and control in Mauritius. However, under the published Mauritius Revenue Authority Statement of Practice, a trust or founda - tion set up in Mauritius is treated as non-resident if it is centrally managed and controlled (CMC) outside Mauritius. Trusts Under the Statement of Practice, a trust will be treated as being CMC in Mauritius if: • the trust is administered in Mauritius and a majority of the trustees are resident in Mauritius; • 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 • a majority of the beneficiaries or class of benefi - ciaries appointed under the terms of the trust are resident in Mauritius. Foundations Similarly, a foundation will be treated as being CMC in Mauritius if: • the founder is resident in Mauritius; and • a majority of the beneficiaries appointed under the terms of a charter are resident in Mauritius.
Therefore, a trust or a foundation will be deemed to be non-resident if it does not meet the criteria for being CMC in Mauritius. A non-resident trust or foundation will be subject to source-based taxation only – ie, only on income derived from Mauritius. A Mauritius-resident beneficiary of a resident trust or a foundation is exempt from income tax on any distribu - tions (which are treated as dividends). 1.2 Exemptions There is no inheritance, succession, estate, donation or gift tax in Mauritius. Property transferred to the heirs of an individual is exempt from any land transfer tax and registration duty. 1.3 Income Tax Planning There is scope for using vehicles for efficient income tax planning in Mauritius. Trusts and foundations can be used as vehicles for investment purposes; benefi - ciaries are not subject to any Mauritius income tax on any distributions. Alternatively, assets and wealth can be reinvested (no distribution) without any tax arising in the hands of the beneficiaries. There are no close company rules in Mauritius. In addition, Mauritius-resident trusts and foundations may be eligible to treaty benefits. Mauritius has a wide double tax treaty network, which makes it an attrac - tive jurisdiction for wealth planning. 1.4 Taxation of Real Estate Owned by Non- Residents Rental Income Rental income on Mauritius real estate is treated as Mauritius source income. Therefore, rental income is typically subject to income tax in Mauritius, regardless of whether it is received by residents or non-residents. A withholding tax (also known as tax deduction at source) is applicable on rental payments made by any person other than an individual.
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