Mauritius clarifies taxation applied to foreign fiscally transparent entities

The Mauritius Revenue Authority (MRA) issued a communiqué on 1 July to clarify that income that is distributed by a foreign fiscally transparent entity to Mauritian residents will retain its initial character in Mauritius.

As such, any capital gains eventually distributed by a foreign fiscally transparent entity to a Mauritian resident will be treated as capital gains and will not therefore be subject to income tax in Mauritius.

This implies that income earned by a Mauritius company from an Alternative Investment Fund (AIF) will be subject to tax in Mauritius as if the income derived or received by the AIF is received directly at the level of the Mauritius company. Income of a capital nature earned by the AIF will therefore be treated as of a capital nature in Mauritius as well, rather than as a dividend.