MRA clarifies tax treatment of distribution made by Fiscally Transparent Entities

MRA clarifies tax treatment of distribution made by Fiscally Transparent Entities

On 1 July 2022. the Mauritius Revenue Authority (“MRA”) issued a communique clarifying the tax treatment applicable on a distribution made by Fiscally Transparent Entities (“FTE”).

In 2021, the MRA issued Income Tax Ruling 235 where it ruled that income distribution including capital gains, made by an Alternative Investment Fund (“AIF”) category II and category III to a Mauritius entity, must be treated as dividend income and that the distribution will not retain their initial characteristics. 

In their July 2022 communique, the MRA clarified that income distributed by a foreign FTE will maintain its initial character in Mauritius.

Consequently, any capital gains distributed by a foreign FTE to a Mauritian resident shall be treated as capital gains and will not be subject to income tax in Mauritius. 

 

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