Application of the new transfer pricing legislation

The Mauritian Government has enacted Country-By-Country Reporting (CbCR) regulations under section 76 of the Mauritian Income Tax Act. The regulations were proclaimed on 19 February 2018 and will become effective for reporting fiscal years of multinational enterprise (MNE) groups beginning on or after 1 July 2018.

The regulations are generally in line with the CbCR guidance provided by the Organisation for Economic Cooperation and Development OECD.

What is Country-by-Country Reporting?

The BEPS Action Plan adopted by the OECD and G20 countries in 2013 recognised that enhancing transparency for tax administrations by providing them with adequate information to assess high-level transfer pricing and other BEPS-related risks is a crucial aspect for tackling the BEPS problem.

The BEPS Action 13 report (Transfer Pricing Documentation and Country-by-Country Reporting) provides a template for MNEs to disclose information annually regarding each tax jurisdiction where the MNE operates. This report is called the Country-by-Country (CbC) Report.

As per the standard CbC legislation, MNEs with consolidated turnover exceeding EUR 750 million in the previous financial year are subject to these rules.

The Regulations stipulate that any person not complying with any of the provisions may be liable to a fine note exceeding 5,000 rupees and to imprisonment for a term not exceeding 6 months.

Next steps to be taken

Taxpayers that are part of MNE groups and have operations in Mauritius should be aware of these regulations and prepare to comply with them.

For more information, please contact one of the following:

–       Michael Hewson, Director, e-mail: mhewson@grapheneeconomics.com, cell: +27 82 345 1212

–       Valdis Leikus, Associate Director, e-mail: vleikus@grapheneeconomics.com, cell: +27 76 867 1478