MAURITIUS Law and Practice Contributed by: Bhavna Ramsurun, Pinki Mahata, Lorna Senivassen and Shreya Mungur, BLC Robert & Associates
Companies Companies are tax opaque. Where a fund is structured as a company, it is liable to pay tax on its chargeable income at the rate of 15% and may be subject to a corporate climate responsi - bility levy of 2% on its chargeable income where its turnover exceeds MUR50 million. However, a CEF or CIS duly authorised by the FSC may be entitled to benefit from a partial exemption of 80% on all its income (except interest income) and a partial exemption at the rate of 95% on interest income if it satisfies the following conditions relating to the substance of its activities, among other things. The partial exemption of 80% on all income is also available to a CIS manager, CIS administrator, investment adviser, investment dealer or asset manager duly authorised by the FSC. The substance conditions are that the company: • carries out its core income-generating activi - ties in Mauritius; • employs, directly or indirectly, an adequate number of suitably qualified persons to con - duct its core income-generating activities; and • incurs a minimum expenditure proportionate to its level of activities. Alternatively, a company may be entitled to claim foreign tax paid on its foreign source income as credits against the income tax payable in Mau - ritius (up to a maximum of 15% or up to 17% where a corporate climate responsibility levy is applicable) in respect of that income, where this can be evidenced (“Foreign Tax Credit”). The Mauritius Income Tax Act 1995 (ITA) defines “foreign source income” as income that is not derived in Mauritius.
to the Mauritius Revenue Authority on the finan - cial accounts held by non-residents for eventual exchange with relevant treaty partners. Funds in Mauritius must assess their FATCA and CRS classification to determine their reporting requirements to the Mauritius Revenue Authority. 2.5 Fund Finance Funds in Mauritius can access fund finance for subscription financing and/or leverage. There are no regulatory restrictions in relation to bor - rowings for funds categorised as expert funds or professional CISs; these requirements will be guided by the fund documentation. Typically, a fund finance transaction related to private equity funds will be secured by security over the fund’s bank accounts and the assign - ment of rights to make capital calls. The latter is accompanied by a power of attorney in favour of the lender to exercise such rights on behalf of the fund/general partner and/or manager (as the case may be), in addition to the assignment. The main issues are the restrictions on the crea - tion of security rights over capital commitments/ calls or the use of investor contributions. These restrictions may be set out in the private equity fund’s documentation and more especially the side letters between the fund and a particular investor. It is also common for investors to resist acknowledging any notice of assignment and refuse to pay the lender directly. 2.6 Tax Regime The tax status of alternative funds established in Mauritius will depend on the type of vehicle used to structure a fund. Funds are generally structured as companies or limited partnerships.
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