We are pleased to release our third edition of Evolve Tax News for this year.
The Mauritius-India Double Taxation Avoidance Agreement (Tax Treaty) still attracts attention particularly when it comes to treaty benefits. The Indian Authority for Advance Rulings (AAR) recently rejected applications made by three Mauritian entities on the taxability of capital gains on indirect transfer of an Indian company’s shares, under the Mauritius-India Tax Treaty. The AAR held that the transaction was prima facie designed for tax avoidance and the benefit of the Tax Treaty cannot be allowed in this case. We bring you the details of the case and share our observations.
We also share some interesting development that is taking place globally that may soon impact businesses locally. These include a new trend that of e-invoicing which is a promising tool for tax administration to curb fiscal evasion given the access to information on business transactions in real-time.
Right Of Use: An important concept introduced by IFRS 16 that impacts tax treatment on leased assets. We will share important facts that you should know around this topic and as well as the guidance from the Mauritius Revenue Authority.
As the fiscal year 2019-2020 is now over, we have summarise all the annual reporting requirements that you need to comply with.
The Tax Team
Benefits under Mauritius-India Tax Treaty
After years of negotiation, the Mauritius-India Tax Treaty was finally amended in 2016. Under the original treaty, where a Mauritian resident disposed of its investments in shares in India, any gain was taxable only in Mauritius. Under the revised treaty, the taxing right in respect of capital gains was eventually granted to India.
Following the entry into force of the International Financial Reporting Standard 16 (IFRS 16) in 2019 and its impact on the accounting treatment of the assets acquired under lease, the Mauritius Revenue Authority (MRA) has issued a Statement of Practice (SP19/20), dated 15 June 2020, to give guidance on the related tax treatment.
Disclaimer: The content of this publication has been prepared for general guidance only based on information available to date and does not constitute professional advice . We do not provide any guarantee or indemnity that any interpretation will ultimately be sustained in the event of a challenge by the relevant authorities. The laws, practices and interpretations, on which this publication is based, may change over time. Therefore, you are cautioned to keep abreast of such changes and should consult us, as appropriate, if time has passed or circumstances have changed.
Rogers Capital Corporate Services Limited, its directors, officers, employees and agents do not accept any liability or duty of care for any loss arising from any action taken in reliance to information contained in this publication or for any decision based on it.