Mauritius-based PEs not to pay additional capital gains tax, says MRA

IVCA had said the move to treat all income from Indian AIFs as dividends would wreak havoc on funds with a presence in Mauritius and investments in India

tax
BS Reporter Mumbai
2 min read Last Updated : Jul 02 2022 | 12:13 PM IST
The Mauritius Revenue Authority (MRA) has clarified that foreign entities based in the island country need not pay additional capital gains tax following representations from private equity firms which have invested in India.

The MRA said in respect to distributions made by foreign fiscally transparent entities to Mauritian residents, it wishes to clarify that income, which is distributed by a foreign fiscally transparent entity, retain its initial character in Mauritius.

"As such, any capital gains eventually distributed by a foreign fiscally transparent entity to a Mauritian resident shall be treated as capital gains and thus, are not subject to income tax in Mauritius," it said in a late evening clarification.

The Indian Venture and Alternate Capital Association (IVCA) had said yesterday that the MRA ruling to tax capital gains from India would fundamentally alter the character of all income arising from Indian alternative investment funds (AIFs) and lead to increased litigation and uncertainty for India-bound investments.

IVCA had said the move to treat all income from Indian AIFs as dividends and not as constituent income flows (dividend, interest or capital gains), will wreak havoc on funds with a presence in Mauritius and investments in India. The MRA clarification will help the Mauritius based PEs to invest in India.

One subscription. Two world-class reads.

Already subscribed? Log in

Subscribe to read the full story →
Subscribe to Business Standard digital and get complimentary access to The New York Times

Quarterly Starter

₹900

3 Months

₹300/Month

SAVE 25%

Smart Essential

₹2,700

1 Year

₹225/Month

Save 46%

Super Saver

₹3,900

2 Years

₹162/Month

Subscribe

Renews automatically, cancel anytime

Here’s what’s included in our digital subscription plans

Access to Exclusive Premium Stories Online

  • Over 30 behind the paywall stories daily, handpicked by our editors for subscribers

Complimentary Access to The New York Times

  • News, Games, Cooking, Audio, Wirecutter & The Athletic

Business Standard Epaper

  • Digital replica of our daily newspaper — with options to read, save, and share

Curated Newsletters

  • Insights on markets, finance, politics, tech, and more delivered to your inbox

Market Analysis & Investment Insights

  • In-depth market analysis & insights with access to The Smart Investor

Archives

  • Repository of articles and publications dating back to 1997

Ad-free Reading

  • Uninterrupted reading experience with no advertisements

Seamless Access Across All Devices

  • Access Business Standard across devices — mobile, tablet, or PC, via web or app

Topics :MauritiusMauritius tax treaty

Next Story