Mauritius Issues Guidance on FATCA Implementation
March 20 — The Mauritius Revenue Authority (MRA) has issued to provide practical assistance to financial institutions, businesses, their advisers and officials on the application of the U.S. Foreign Account Tax Compliance Act (FATCA) to ensure that reporting requirements are met.
Mauritius and the U.S. signed Dec. 27, 2013, an agreement for the exchange of information relating to taxes to set the legal framework for enabling the effective exchange of tax information between the two countries. Following which the two countries signed a Model 1 intergovernmental agreement to implement FATCA (03 ITM, 1/6/14). Both agreements were published in the Official Gazette on July 5, 2014, and entered into force Aug. 29, 2014.
Under the agreement, a “Mauritius financial institution” is defined as:
• any financial institution resident in Mauritius, but excluding any branch of the financial institution located abroad; and
• any branch of a financial institution not resident in Mauritius, if such branch is located in Mauritius.
The term applies to specific financial institutions that fall within any, or more than one of, the following categories:
• custodial institution;
• depository institution;
• investment entity; or
• specified insurance company.
Each category of financial institution is determined by a set of criteria which must be met and where an entity does not meet that condition, then the entity is regarded as a non-financial foreign entity.
Under the FATCA agreement, financial institutions will be classified either as a “reporting” institution or a “non-reporting” institution and providing that they are compliant with FATCA, will not be subject to the 30 percent withholding tax on their U.S. source income.
According to the guidance, qualifying financial institutions are required to submit information on their U.S. clients to the MRA by July 31 with respect to the 2014 reporting year. The MRA will then in turn submit the data to the U.S. Internal Revenue Service. Information must be provided on each specified U.S client either holding a reportable account, or as a controlling person of an entity account. Information to be reported should include the client’s name, address, U.S. tax information number, account number, financial institution details and the account balance or value.
Financial institutions are also required to provide details on custodial accounts, depository accounts and other accounts for the 2015 reporting year to the MRA by July 31, 2016. Information on such accounts must include the total gross amount of interest, dividends and other income paid or credited to the account.
With respect to the 2016 reporting year, financial institutions are required to provide details on the total gross proceeds from the sale or redemption of property paid or credited to custodial accounts by July 31, 2017. Thereafter, financial institutions are required to submit FATCA information concerning U.S. clients on July 31 of each year to the MRA.