Taxation of Trusts

  • A trust is liable to income tax at the rate of 15% if the Settlor and beneficiaries are non-residents or hold a Category 1 or 2 Global Business license or is a purpose trust.
  • However, such trusts will be entitled to the presumed foreign tax credit of the higher rate suffered or 80% of its chargeable income, or may deposit a declaration of non-residence within 3 months after the expiry of the income year, it will then be exempt from income tax.
  • Chargeable income shall be the difference between the net income derived by the trust and the aggregate income distributed to the beneficiaries under the terms of the trust.
  • Any amount of income distributed to the non-resident beneficiaries shall be exempt from income tax in the hands of the beneficiaries.

To be tax resident, a Trust has to apply for a Tax Residence Certificate with the Commissioner of Income Tax, which is delivered under the following conditions:

  • At least one Trustee is resident in Mauritius
  • A bank account is maintained in Mauritius, through which all cash movements are routed.
  • All accounting records are kept with the local Trustee.
  • The local Trustee is a party to all decisions pertaining to the asset protection trust.
Taxation of Trusts was last modified: September 26th, 2021 by Manu Raj

Manu Raj

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