The Mauritian Revenue Authority (MRA) has issued Income Tax Ruling No. 244, explaining tax residency, exempt dividends, and loss carry-forwards for companies.
A company that incorporated in Mauritius intended to transfer its corporate domicile to Guernsey while keeping its operating model in Mauritius and continue to:
- take its key strategic and commercial decisions from Mauritius;
- chair its Board meetings from Mauritius;
- have a majority of directors who are tax resident in Mauritius;
- carry out its core business activity, that is the provision of hotel management services from Mauritius;
- use its physical office in Mauritius as its registered premises, which will be used to carry out its business activities; and
- employ its current local workforce, which currently stands at 125 individuals, who will perform their duties pertaining to the core business activity from Mauritius.
At issue was tax residency, the application of Mauritian tax laws, the exemption of dividends, and the carry-forward of accumulated tax losses.
The MRA ruled that:
The company would be a dual resident when it incorporated in Guernsey;
The company would be considered tax resident in Mauritius under the tie-breaker clause of the DTA with Guernsey, given that its place of effective management will remain in Mauritius.
The company would also be required to comply with the provisions of the Income Tax Act, including the filing of annual returns under section 116 of the Income Tax Act.
The company would also be able to carry forward its accumulated losses provided that the conditions stipulated in section 59 of the Income Tax Act and in Regulation 19 of the Income Tax Regulations 1996 are satisfied.