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Mauritius enacted the Income Tax Regulations 2018

Emma Liu 12 Mar 2018

Mauritius enacted the income tax (country-by-country reporting) regulations 2018 as an initiative to comply with BEPS action point 13. Taxand Mauritius presents an analysis.  

Pursuant to Mauritius adhering to the all-inclusive framework of the OECD, the country has committed to adhere to the minimum standards as set out in the  BEPS initiative. The minimum standards comprise adoption of the following action points:

• Action point 5    –  Addressing harmful tax practices
• Action point 6    –  Treaty abuse
• Action point 13  –  Country by Country reporting
• Action point 15  –  Multilateral instrument

Mauritius, you would recall, signed the Multilateral Instrument (action point 15) on 5 July 2017, whereby the country agreed that 23 treaties would be treated as covered agreements and has also adopted the principal purpose test as a measure of addressing treaty abuse (action point 6). Work is currently being undertaken to address the issue of harmful tax practices (action point 5). The only remaining minimum standard is with respect to action point 13 on country-by country reporting (CBCR). A multinational enterprise (MNE) is required to file CBCR annually for each of the tax jurisdiction it does business. An MNE does not have to report if the consolidated earnings is less than EUR 750 million during the fiscal year immediately preceding the reporting fiscal year.

The Mauritius Government  has on 19 February 2018, enacted The Income Tax (Country-by-Country Reporting) Regulations 2018 (the “Regulation”), requiring the ultimate parent or surrogate entity (nominated as being the ultimate parent company for CBCR purposes) of a MNE group that is resident for tax purposes in Mauritius to file with the Director General of the Mauritius Revenue Authority a country-by-country report.

The report shall contain information as set out below for each jurisdiction where the MNE group operates:

(a) Aggregate information relating to:

1. The amount of revenue
2. Profit or loss before income tax
3. Income tax paid
4. Income tax accrued
5. Stated capital
6. Tangible assets other than cash or cash equivalent
7. Accumulated earnings
8. Number of employees

(b)   Identification of each constituent of the MNE group setting out the jurisdiction of tax residence of the constituent entity.

Further any constituent of an MNE group (group company including PE) resident in Mauritius for tax purposes shall give written notification to the Director General of the MRA if it is the ultimate parent entity or the surrogate entity not later than 12  months after the last day of the reporting fiscal year of the MNE group . Where a constituent entity of an MNE group resident in Mauritius for tax purposes, is not the ultimate parent entity nor the surrogate parent entity, it shall give notice to the Director General of the reporting entity, not later than 12 months from the last day of the reporting fiscal year of the MNE group.

The CBCR filing should be done not later than 12 months from the last day of the reporting fiscal year of the MNE group. The regulations shall be effective for reporting fiscal years of MNE groups beginning on or after I July 2018. Failure to comply with any provision of the the Regulations is an offence and shall on conviction be liable to a fine not exceeding MUR 5,000 and to imprisonment for a term not exceeding 6 months.

Taxand's Take

Taxand Mauritius will be happy to assist you in:

1. Giving written notification to the Director General of the MRA with respect to resident constituent of an MNE group which is ultimate parent entity or the surrogate entity of an MNE group; and also in instances where such resident constituent is not the ultimate parent entity nor the surrogate parent entity of the MNE group
2. Determining whether a company is a reporting entity for the CBCR purposes
3. Preparing the information to be submitted to the Director General
4. Submit the CBCR return within the prescribed period
5. Although a CBCR return may not be required to be filed in Mauritius, the Mauritius entity of the MNE group may still be required to provide information to the ultimate parent company or surrogate parent entity of the MNE group. We can assist in the completion of the tables prescribed in the action point and which part of the schedule of the regulations

Article tags

International Tax | Mauritius | TP & Business Restructuring