International Expansion: Mauritius Overview

GENERAL OVERVIEW

A trust is a legal agreement entered into by the “Settlor” whereby he appoints “Trustees” to manage and look after all trust assets on behalf of “beneficiaries”.

• • Settlor – The person setting up the trust and from which the initial trust assets will be transferred to the trustees
  • Trustees – The custodians of the trust assets. Trustees are required to be independent. Trustees may therefore not also be a beneficiary
  • Beneficiaries – recipients or benefactors of trust assets.

Although trust arrangements may include numerous variations the most prevalent of these are whether a trust is a testamentary or inter-vivos trust, vesting or a discretionary as well as stipulations relating to what the trust may or may not do and what it may or may not distribute.

In most cases, a trust being set up will be an inter-vivos trust or in other words a living trust. It is being formed whilst the settlor is still alive.

The trust arrangement or trust deed will then also stipulates whether a beneficiary has a vesting right on trust assets or whether the trustees have full discretion as to the distribution of either trust capital or trust earning.

The settlor may go into much detail as to how he would like the trustees to manage the trust assets. However, without specifying in much detail the standard principles will apply being that the trustees will act in good faith and to the benefit of the trust as a whole.

THE ADVANTAGES TO YOU MAKING USE OF A TRUST STRUCTURE

The most common advantages of trust structures include:

• • Tax planning;
  • Avoiding probate, in other words not having assets included in your estate;
  • Wealth preservation across generations;
  • Asset protection;
  • Estate planning.

CONFIDENTIALITY

A trust is completely confidential. There is no formal register of the settlor or beneficiaries. The trustees are however required fully identify all individuals associated with a trust and to prevent money laundering.

TAXATION IN MAURITIUS

A trust is a resident for Mauritian tax purposes and therefore subject to 15% tax rate. A trust is also subject to the possible partial exemption of 80% resulting in effective tax rate of only 3% (see section on taxes).

You are however aware that anti-avoidance legislation in various countries needs to be taken into account in ensuring that neither the settlor or any of the beneficiaries are being taxes on the income of the trust. Your discretion and dedicated awareness to this ensures that your mitigate your tax risk.

CORPORATE TAXES

• MUR imposes corporate taxes on its residents amounting to 15%. Subject to compliance with substance requirements your company holding a global business license may claim a 80% partial tax exemption on certain foreign sourced income. Most notably these include:
• • Foreign interest
  • Foreign dividends
  • Profits of a foreign permanent establishment and many others
• The 80% partial exemption requires the proof of substance (ESR). The proving of substance  includes the following:
• • Certain minimum full-time employees
  • Should a GBL company be actively trading the following will also be applied:
    • 1x Employee for turnover up to USD 100m
    • 2x Employees for turnover in excess of USD 200m
    • Annual expenses amounting to USD 15 000
  • Such amount received should not have been treated as an allowable deduction in the source country.

• Should your company or group of companies have an annual turnover in excess of Rs 500 million (+-USD = 12 500 000, ZAR = 219 000 000) will be subject to a levy on its annual gross income of 0.3% for insurance, financial institutions, service providers, property holding companies and 0.1% for all other companies. This is however not applicable to GBL license holders or companies in the tourism sector.
• There is no taxation in Mauritius on:
• • Dividends;
  • Capital Gains
  • Withholding taxes;
  • Inheritance (estate duties);
  • Alienation of shares;
  • Donations tax; or
  • Wealth tax.

INDIVIDUAL TAXES

• As is the case with your company the individual tax rate is also 15%. However, as from 2020 the Mauritian government has imposed what they refer to as a solidarity levy. This will increase your effective tax to be closer to 25% instead of the previous 15%
• To be taxed at these rates you will have to be a Mauritian citizen or you will have to be deemed to be exclusively a resident in this country based on the applicable Double Taxation Agreement between Mauritius and your home country. You know that this will only become applicable one your residence has been confirmed or the DTA prevails.
• To be deemed to be exclusively resident in Mauritius is fact based and your personal circumstances must be taken into account year by year. You will most probably have to be in the country for more than 6 months with a fixed place of residence.

VALUE ADDED TAXATION (VAT)

• VAT is levied at 15% on the supply of goods and services. The principle remains that VAT is a consumption based tax and will be levied on goods which is consumed in the country.