Earlier this month Mauritius joined leading global jurisdictions by becoming the latest nation to sign the Multilateral Convention to implement tax treaty measures to prevent Base Erosion and Profit Sharing (‘BEPS’) under article 15 of the OECD BEPS Action Plan.
This step reaffirms the commitment of Mauritius to implement the standards of OECD BEPS in its network of 23 tax treaties covered by the Multilateral Convention.
Under the terms of the Convention, Mauritius has adopted the BEPS minimum standards:
- For the prevention of treaty abuse;
- To enhance dispute resolution; and
- Mandatory arbitration provisions.
1. Prevention of treaty abuse.
The prevention of treaty abuse is achieved by two elements under BEPS. First the statement of intent that the intended purpose of a double taxation agreement between states to eliminate the double taxation of individuals and entities, and not to allow or create opportunities for tax evasion or tax avoidance in the participating jurisdictions. And second, by adopting as an interim measure the Principal Purpose Rule (PPR), to prevent abuse.
2. Enhancing dispute resolution.
BEPS provides a dispute resolution provision which would allow Mauritius resident tax payers to request assistance from the Mauritius Revenue Authority (‘MRA’) in cases when the taxpayer considers taxation is not in accordance with the provisions of the relevant DTA. The MRA can then deal directly with the treaty partner to resolve the dispute.
3. Binding Arbitration
In addition to the dispute resolution provisions under BEPS, Mauritius has opted-in to mandatory binding arbitration to ensure that any dispute between treaty partners is resolved in a stated timescale.
A total of 69 countries are signatories of BEPS which adds provisions to prevent anti-base erosion and profit shifting to international treaties. It is intended that the Multilateral Convention will prevent multinational companies from exploiting BEPS by relocating profits to low or no-tax jurisdictions.
Mauritius currently is a signatory to 42 tax treaties of which 15 are to be amended by the Multilateral Convention. The remaining treaties will be subject to bilateral discussions with the aim of implementing BEPS minimum standards by late next year (2018).
Mr Mahess Rawoteea from the Mauritian Ministry of Finance attended the signing ceremony at the OECD in Paris with Mr Douglas Frantz the OECD Deputy Secretary-General.