PRIOR TO THE CHANGE
Prior to the changes brought forward through in the FA 2021, all resident trusts and foundations were subject to income tax in Mauritius at the rate of 15%, subject to any exemptions or tax reliefs.
Subject to certain conditions being met, trusts and foundations who were eligible could file an annual declaration of non-residence and hence benefit from an income tax exemption in Mauritius.
THE CHANGE
With the enactment of the FA 2021, the exemption provided to qualifying non-resident trusts and foundations has been repealed effective from the year of assessment commencing 1 July 2022. A grandfathering period has however been granted for qualifying trusts and foundations set up before 30 June 2021 which may still file a declaration of non-residence and be exempted from tax until year of assessment 2024-2025. The grandfathering provisions do not apply to income derived by a trust or foundation from certain intellectual property assets acquired or newly created after 30 June 2021, or to income derived from such specific assets acquired or projects started after 30 June 2021, as the Director-General may determine, which will be taxable in Mauritius.
Under section 73A of the Income Tax Act 1995 (ITA) and as confirmed by the SOP, trusts or foundations which have their central management and control would be considered as non-resident.
TAX IMPLICATIONS:
- For charitable trusts and foundations - EXEMPT
- For resident trusts and foundations
- Subject to income tax in Mauritius on worldwide income as the prevailing tax rate of 15%.
- May benefit from the 80% partial exemption which is provided to certain income streams, subject to compliance with the required substance conditions in Mauritius.
- Required to submit annual tax return to the MRA within 6 months following accounting period end.
- For non-resident trusts and foundations
- Subject to income tax in Mauritius only on income derived from Mauritius at the prevailing tax rate of 15%.
- May benefit from the 80% partial exemption which is provided to certain income streams, subject to compliance with the required substance conditions in Mauritius.
- Required to submit annual tax return to the MRA within 6 months following accounting period end.
FOLLOWING THE FA 2021 AND CLARIFICATIONS IN THE MRA SOP CENTRAL MANAGEMENT AND CONTROL IS CONSIDERED TO BE IN MAURITIUS FOR TAX RESIDENCY FOR TRUSTS AND FOUNDATIONSWHEN ALL OF THE FOLLOWING CONDITIONS ARE MET
FOR A TRUST:
- 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 the class of beneficiaries appointed under the terms of the trust are resident in Mauritius.
FOR A FOUNDATION:
FOR A FOUNDATION:
- The founder is resident in Mauritius; and
- A majority of the beneficiaries appointed under the terms of a charter or will are resident in Mauritius.
For more info, please get in touch with our team on:
office@rosemont.mu
clientservices@rosemont.mu
+ 230 460 0682