Tax and Regulatory alert
New enhanced substance requirements and Income tax amendments
In line with the OECD’s initiatives to counter harmful tax practices and the commitment of the Government of Mauritius to step up and strengthen its good repute as an International Financial Centre, major amendments have been made to domestic legislations.
The abolition of the 80% Deemed Foreign Tax Credit (“DFTC”), introduction of partial exemption and changes to the Global Business tax regime as well as new enhanced substance requirements remain at the heart of these changes.
In continuation to the budgetary measures announced on 14 June 2018 and amendments brought by the Finance Act 2018 (“FA 2018”) [refer to our Alert] which received the President’s assent on the 9 August 2018, the long awaited Income Tax regulations were finally gazetted on 11 October 2018.
In the same vein, the Financial Services Commission (“FSC”), the Regulator for Global Businesses in Mauritius, issued Circular Letters on the 12th and the 15th of October 2018 to clarify the new enhanced substance requirements and to provide indicative definition of core income generating activities respectively.
This Alert summaries the key income tax amendments as well as clarifications brought by the FSC Circular Letters.
Mauritius Revenue Authority issues Statement of Practice on Place of Effective Management (POEM)
The concept of Place of Effective Management (POEM) was recently incorporated in our tax legislation through the new Section 73A of Income Tax Act 1995 (ITA 1995), introduced by the Finance Act 2018.
The Mauritius Revenue Authority has issued a Statement of Practice (SOP) on 28 November 2018, providing guidance on factors to be considered for assessing POEM.