MAURITIUS Law and Practice Contributed by: Johanne Hague, Ashwin Mudhoo, Medina Torabally and Yushrah Bayjou, CMS Prism in association with CMS
Tax on Disposal of Real Estate There should be no tax on the disposal of real estate (by resident or non-residents) so long as the real estate is not held for trading purposes (ie, the disposal is in connection with the disposal of a capital asset). Purchase and sale of immovable property located in Mauritius (held by residents or non-residents) may trigger registration duty or land transfer tax, respec - tively. Land transfer tax is payable by the transferor at the rate of 5% on the value of the immovable property. Registration duty is payable by the transferee at the rate of 5% on the value of the immovable property. Effective 1 July 2026, the land transfer tax and regis - tration duty arising upon the transfer of any residential property of a minimum of 2 floors to a non-citizen under one of the Economic Development Board (EDB) Property Schemes will increase to 10%. This applies to transfers made under the Invest Hotel Schemes, Property Development Schemes, Real Estate Devel - opment Schemes, and Smart City Schemes. Real estate can be bought through vehicles such as trusts, foundations and companies. Since foreigners cannot typically purchase land in Mauritius (save with the approval of the Prime Minister’s Office), the pur - chase of real estate by foreigners in Mauritius is nor - mally effected through special schemes. Residency permits are usually obtained on the purchase of real estate in such schemes. However, land transfer tax and registration duty are still applicable. Settlement of Immovable Property Into a Trust Exemptions from registration duty and land transfer tax may apply if real estate located in Mauritius is set - tled into a trust. Generally, amendments are brought to the tax laws every year by way of the Finance (Miscellaneous Pro - visions) Act (FA). The FA gives effect to the measures announced in the yearly budget speech delivered by the Minister of Finance, Economic Planning and Development. Secondary tax legislation may also be passed or amended by way of regulations throughout the year. 1.5 Stability of Tax Laws Amendments by Legislation
Trusts and Foundations In addition, the regime for the taxation of trusts and foundations was amended in 2021 to tackle concerns raised by the OECD regarding some potentially harm - ful tax features of the previous regime. Certificates of non-residents can no longer be filed by trusts or foundations set up in Mauritius (subject to a tempo - rary grandfathering provision). The Mauritius Revenue Authority, through a Statement of Practice, clarified that a trust or a foundation can still be considered non-resident if certain criteria are met. It is expected that the law will be amended to provide a clear position on the tax treatment of trusts and foundations. There is ongoing dialogue between the industry and the regulators to ensure that any future amendments do not jeopardise the status of Mauritius as a jurisdiction of choice for estate and wealth planning. 1.6 Transparency and Increased Global Reporting Base Erosion and Profit Shifting (BEPS) Minimum Standards Mauritius has been a member of the Inclusive Frame - work since November 2017 and has committed to implement the BEPS minimum standards. The tax leg - islation in Mauritius was overhauled in 2018 to achieve compliance with recommendations on BEPS Action 5 (Countering Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance). The revamped fiscal legislation is now aligned with the recommendations of the Forum on Harmful Tax Practices. Certain regimes, such as the deemed foreign tax cred - it and the freeport regimes, were considered to have potentially harmful tax features and were therefore abolished. Substance requirements have also been introduced for entities that intend to benefit from the partial tax exemption. The change in the tax regime of trusts and foundations was also made to meet the country’s commitment to the OECD initiative to eliminate harmful tax regimes (as explained in 1.5 Stability of Tax Laws ).
375 CHAMBERS.COM
Powered by FlippingBook