By Akshar Maherally, WTS Tax Consulting (Mauritius) Ltd, Mauritius
The Mauritius government on 4 May enacted new penalties for noncompliance with country-by-country reporting requirements set out in 2018 regulations.
The imposition of penalties will encourage multinational entities that are tax resident in Mauritius to comply with the Mauritius country-by-country reporting regulations and reflects the importance that Mauritius ascribes to compliance with the OECD/G20 base erosion profit shifting (BEPS) action plan.
Penalty provisions
Under the new rules, non-compliance with the Mauritius country-by-country reporting regulations constitutes an offense that entails a fine not exceeding MUR 5,000 (approx. EUR 127 or USD 141) and imprisonment of a term not exceeding 6 months.
The regulations impose an additional penalty of MUR 10,000 (approx. EUR 254 or USD 281) per month or part of month if the failure to comply persists after the first penalty has been imposed. This penalty is subject to a maximum of MUR 120,000 (approx. EUR 3,045 or USD 3,376).
Moreover, a penalty not exceeding MUR 50,000 (approx. EUR 1,269 or USD 1,047) is imposed if the reporting entity provides inaccurate information and it is found that the inaccuracy was deliberate on the part of that entity or that the latter was aware of the inaccuracy but failed to inform the Mauritius Revenue Authority accordingly.
Nonetheless, under the new rules, the above penalties would not apply if the Mauritius Revenue Authority is satisfied that there is reasonable ground for not complying with the regulations or for providing inaccurate information.
Reasonable ground, in this case, does not include failure to carry out an act either due to insufficiency of funds or reliance upon another person, the new guidance states.
Time limit to assert penalties
The time limit for the Mauritius Revenue Authority to claim a penalty for non-compliance with the regulations is 12 months from the date on which the entity becomes liable for the penalty.
On the other hand, the Mauritius Revenue Authority may assert the penalty for providing inaccurate information within 12 months from the date that the Mauritius Revenue Authority first became aware of the inaccuracy, but no later than 3 years from the date on which the entity became liable to the penalty.
An entity that disagrees with a claim for penalty made by the Mauritius Revenue Authority may object by lodging written representations with the Assessment Review Committee within 28 days of the date of the claim.
Mauritius country-by-country reporting rules
The BEPS Action 13 report requires multinational groups with annual consolidated group revenue equal to or greater than EUR 750 million to report annually on the group’s entities, their respective jurisdiction of tax residence, the group’s revenue, profit before tax, tax paid and accrued, stated capital, accumulated earnings, number of employees, tangible assets and main business activities.
The reporting is done in the form of a country-by-country report.
The Mauritius country-by-country reporting regulations were enacted in view of the Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports, signed by Mauritius in January 2017 as part of its commitment to implement the BEPS minimum standards.
According to the Mauritius country-by-country reporting regulations, a country-by-country report should be filed in Mauritius as from the fiscal year starting on or after 1 July 2018 when the multinational group’s ultimate parent entity is a tax resident in Mauritius or the multinational group nominates an entity which is tax resident in Mauritius as the surrogate parent entity.
If the Mauritius tax resident entity of the multinational group is neither the ultimate parent entity nor the surrogate parent entity, it should notify the Mauritius Revenue Authority of the identity and tax residence of its ultimate parent entity or surrogate parent entity.
–Akshar Maherally is Managing Director at WTS Tax Consulting (Mauritius) Ltd, Mauritius.
Very informative and detailed….thanks for this Akshar!