Tuesday, Sep 22, 2020 | Last Update : 09:51 PM IST

182nd Day Of Lockdown

Maharashtra122438091634833015 Andhra Pradesh6317495518215410 Tamil Nadu5473374919718871 Karnataka5268764233778145 Uttar Pradesh3588932895945135 Delhi2492592133045014 West Bengal2283021989834421 Odisha184122149379763 Telangana1726081419301042 Bihar169856155824870 Assam159320129130578 Kerala13863398720554 Gujarat1247671051913337 Rajasthan116881972841352 Haryana113075908841177 Madhya Pradesh108167836182007 Punjab99930754092860 Chhatisgarh8618347653680 Jharkhand7267358543626 Jammu and Kashmir65026421151024 Uttarakhand4177729000501 Goa2875322726360 Puducherry2319118065467 Tripura2227215441245 Himachal Pradesh124387836125 Chandigarh102987411123 Manipur9010683859 Arunachal Pradesh7385540813 Nagaland5544445110 Meghalaya4733252838 Sikkim2447190529 Mizoram158510120
  Business   In Other News  19 Jun 2019  Mauritius rule changes may hit offshore funds

Mauritius rule changes may hit offshore funds

Published : Jun 19, 2019, 2:19 am IST
Updated : Jun 19, 2019, 2:19 am IST

Funds may lose tax benefit after rule amendment.

The question now will be what operations are centrally managed and controlled.
 The question now will be what operations are centrally managed and controlled.

Mumbai: The Mauritius government’s proposal to amend tax residency rules for companies is giving jitters to foreign funds operating from the tax haven.

Mauritius has recently announced that it is amending rules for determining tax residency for companies so that a company will not be considered tax resident in the country if it is centrally managed and controlled outside Mauritius.


According to experts, this change would hit hundreds of offshore funds operating out of the island nation and invest in India to take advantage of the Indo-Mauritius tax treaty.

“It is a significant change and the way they look at it will be different and may have new test to figure out whether these companies are complying with the new norms. It needs to figured out what are the tests they are going to lay out,” said Suresh Swamy, Partner, PwC.

The question now will be what operations are centrally managed and controlled. For instance, a company may have its board of directors in Mauritius while it is managed from India. In this case, the authorities could say the company is not eligible for tax residency. They will now look at what is the substance that is there on the ground.


In many cases, the board meetings happen in Mauritius, directors are in Mauritius but the control and management is actually not in Mauritius.

“If the authorities find that it is not in Mauritius, then the entity is not a tax resident at all, and if it’s not a tax resident, then the treaty benefits it gets with other countries will not be available to it,” experts said.

The fallout of this move will be that many of the structures currently set up in Mauritius and claiming treaty benefits on the basis that they have tax residency certificates may now have to relook at the structures.

Now a company will have to demonstrate that its entire management is resided in Mauritius and if it is centrally managed and controlled outside, then it may not be entitled to it.


So, many of the Mauritius structures may get challenged in Mauritius itself and several existing structures will be forced to increase the substance requirements within Mauritius for them to continue getting the tax benefits, experts said.

The proposed amendment announced in the latest budget said that the Partial Exemption Regime under the Income Tax Regulations 1996 will be amended to define the detailed substance requirements that must be met in order for a taxpayer to enjoy the partial exemption benefit.

Tags: mauritius government, indo-mauritius tax treaty