MAURITIUS TIGHTENS PROCEDURE FOR ISSUANCE OF TAX RESIDENCY CERTIFICATE
Mauritius has swiftly acted to address issues raised by India on the alleged misuse of the double taxation avoidance agreement (DTAA). The move includes ensuring that all banking transactions are routed though an account in Mauritius . The Mauritius revenue department has issued a circular in this regard. The circular has laid down enhanced procedures for issue of Tax Residency Certificate (TRC) and brief summary of the same are given hereunder:
1. New Companies
All companies holding a Category 1 Global Business Licence (‘C1GB Licence’) and which are not required to file returns may apply for a TRC, provided they fulfill the requirements of the Circular. Consequently, a newly incorporated company, which will not have an obligation to file returns at the time of its first application for a TRC, will also be eligible for a TRC on the recommendation of the Commission.
2. Applications through Commission
All applications for a TRC from companies holding a C1GB Licence will henceforth be made through the Commission. The Commission will recommend the issue of a TRC if it is satisfied that the undertakings in respect of the following pre-requisites for a TRC have been provided.
Pre-requisite for a Tax Residence Certificate (TRC)
(To be given in the form of undertakings)
(1) The Company shall at all times have at least two Directors resident in Mauritius . The resident directors shall be of appropriate calibre who can exercise independence of mind and judgement.
(2) All meetings of the Board of Directors shall be held, chaired and minuted in Mauritius .
(3) The company shall at all times keep all its accounting records at its registered office in Mauritius .
(4) The company shall ensure that all its banking transactions are channelled through a bank account in Mauritius .
3. Submission of Returns
A company, holding a C1GB Licence, applying for a TRC will have to ensure that all returns of income due for submission as on the date of application have been submitted to the Director General of the MRA. For example, a company which has 31 October as its accounting year end and which makes an application for a TRC on 5 October, will have to ensure that it has submitted its returns of income related to all past accounting periods ending on 31 October of the immediately preceding year. This requirement will not affect newly incorporated companies.
4. TRC with respect to Specified Tax Treaty
The TRC will be issued pursuant to a Tax Treaty. Accordingly, the application will have to state the Tax Treaty in relation to which a TRC is being applied for. The TRC will be issued on an annual basis. The first TRC will be effective from the date of issue of the C1GB Licence of the company and shall remain valid until the expiry of the validity date of the C1GB Licence. The next and subsequent TRC will be effective and valid from the date of renewal of the C1GB Licence until its expiry.
All applications to the Director-General of the MRA for a TRC should be made on behalf of the company by its Management Company and should be supported by the following documents:
A statement showing the Tax Treaty under which the TRC is being applied for
A statement to the effect that the return of income that the company is required to submit under the ITA has been filed
Undertakings should be given in accordance with the requirements set out in 2 above and should be signed by any two resident directors and the secretary of the company
Certified copies of amendments ( if any ) made to the company’s constitution, certified copy of the company’s certificate of incorporation and C1GB Licence, certified copy of Board Minutes evidencing resolutions passed to satisfy the requirements given in the annexure
6. Recommending the application to Director General
If the Commission is satisfied that the company has fulfilled the requirements of the Circular and the company is in good standing, the Commission will recommend the application of the TRC to the Director General, MRA.
7. Renewal of TRC
In the case of an application for the renewal of a TRC, the company should certify that the undertakings given at the time of the first application are still being complied with. If the Commission is satisfied that the company has fulfilled the requirements of the Circular, it will recommend the application of the TRC.
8. Revocation of recommendation
The Commission reserves the right to revoke its recommendation if at any time it comes to its knowledge that the company has not fulfilled the requirements of the Circular and the company is in good standing.
9. Pending Applications
Applications which are pending and which have not been processed prior to this Circular will be processed in accordance with the procedure that existed before the issue of this Circular. However, the TRC will be issued in accordance with the recent amendments to the ITA.