Harmful Tax Regimes - BEPS Action 5 - Mauritius

The OECD has recently issued an updated report Under the Inclusive Framework on BEPS: Action 5. It is important to note the emphasis that is given in this Action with respect to “substance” in the relevant jurisdiction. Given the elevation of the substantial activities requirement in the work on preferential regimes as part of the BEPS Project, it was considered appropriate to resume the application of the substantial activities requirement set out in the original Harmful Tax Regime 1998 Report (OECD, 1998) for no or only nominal tax jurisdictions and provide guidance on the application of the requirement. This will have a significant effect on existing low tax jurisdictions who will now need to review their regimes based on these new OECD requirements.

As a responsible and mature jurisdiction in agreement with international standards, Mauritius in line with recent changes to its global industry, tax credit system, captive insurance and others has adhered to Action 5 of BEPS. 

The Action 5 minimum standard consists of two parts. One part relates to preferential tax regimes, where a peer review is undertaken to identify features of such regimes that can facilitate base erosion and profit shifting, and therefore have the potential to unfairly impact the tax base of other jurisdictions. The second part includes a commitment to transparency through the compulsory spontaneous exchange of relevant information on taxpayer-specific rulings which, in the absence of such information exchange, could give rise to BEPS concerns.

On 13 November 2018, the Inclusive Framework on BEPS approved updates to the results of reviews of preferential tax regimes conducted in connection with BEPS Action 5.  The updated Peer Review Results on Preferential Regimes show that Mauritius has amended and/or abolished certain schemes and is now compliant.

Mauritius is and remains a fully collaborative and responsible international financial centre which has taken significant steps to adhere to international best practices as set by leading globally recognised institutions.

For more information, please contact Neermal Poonie at n.poonie@rosemont.mu