In a bid to curb the spread of the COVID-19 on the island, the government took the bold decision to extend the sanitary curfew until 15 April 2020. This was announced by the Prime Minister in a televised press conference on 30 March 2020.

We remain committed to bringing you the latest updates on how the COVID-19 pandemic is affecting businesses in Mauritius:

Impact of COVID-19 on international taxation 

COVID-19 has brought to a stand-still several operations around the world. It is indisputable that the measures taken to combat COVID-19 will affect individuals and businesses. The Organisation for Economic Cooperation and Development (“OECD”) has already put forward several proposals to tax administrations across the world to alleviate the burden of taxpayers and to support businesses. These include (i) deferral of payments; (ii) remitting interest and penalties and (iii) suspending debt recovery.

The Mauritius Revenue Authority has already indicated that it will be providing some of the above-mentioned support to its taxpayers – as communicated previously in our news release (click here)

However, there has, so far, been no mention in Mauritius of broader international taxation issues that are or will be impacted by COVID-19.

We focus on three matters that may arise below.

Tax Residence for individuals

The residence test for individuals in Mauritius is based on the number of days a person spends in an income tax year in Mauritius.

Due to measures taken to combat COVID-19 (forced quarantine, borders closed or medical advice), some individuals may find themselves present in Mauritius for a greater amount of days. It is interesting to note that in other jurisdictions that the counting of days for tax residency purposes has been suspended. For instance, in the island of Jersey, the tax authorities have indicated that they will ignore additional days spent in the island as a result of COVID-19 measures. The UK has issued similar guidance in this respect.

The Mauritius Revenue Authority has yet not indicated its position on the matter.

Board Meetings

We note that the restrictions pertaining to travel will make it impossible for directors based overseas to come to Mauritius for board meetings. The location of board meetings directly has a bearing on the tax residency of certain companies.

Whilst in Mauritius there is no statutory requirement to hold physical board meetings, the location of board meetings in Mauritius is usually recommended to ensure that the central management and control of a company remains in Mauritius. As this will not be possible for certain amount of time, companies have to explore other means of holding board meetings without jeopardising their tax residence in Mauritius.

Again, some other jurisdictions have expressed the view that changes in operating practices due to COVID-19 will not mean that a company’s tax residency has changed provided that those changes are temporary and in response to the outbreak.

Enhanced Substance Requirements

Since 2018, some companies must satisfy enhanced substance requirements relating to the core-income generating activities, employment and expenditure. The substance requirements are not prescriptive, and generally companies intend to satisfy them in a number of ways, some of which could involve travel from overseas.

These arrangements may now be in limbo following the restrictions due to COVID-19.

Please do not hesitate to reach out to us if you have concerns or queries in relation to the tax residence or economic substance of your company.

This alert should not be construed as legal/tax advice and should not be relied upon as such. ITL will not be held responsible for any misinterpretation.

If you need further assistance with this regards, please liaise with your usual contact person at ITL or send us an e-mail oninfo@intercontinentaltrust.com