Under section 73(3)(a)(i) of the Financial Services Act (“FSA”), the holder of a global business licence shall, at all times, “carry out its core income generating activities in, or from, Mauritius, as required under the Income Tax Act…”.
Under the Income Tax Act, only entities availing themselves from a preferential tax advantages need to satisfy substance requirements. These substance requirements are set out in the Income Tax Regulations. One of the substance requirements is the requirement to carry out its core income generating activities in Mauritius. For sake of completeness, there are two other substance requirements to be fulfilled concurrently, namely employment of persons and incurring of a minimum expenditure. With regard to the core income generating activities, the Income Tax Regulations in Regulations 23D(2)(b) provide for what would constitute core income generating activities for different licence holders and/or businesses.
In a letter dated 17 January 2022 addressed to the Board of Directors of all Management Companies, the FSC clarifies that it “would require only holders of or applicants for a Global Business Licence that benefit or would like to benefit from a preferential tax advantage, to demonstrate that at all times their core income generating activities are or would be carried out in, or from, Mauritius”. The letter further provides that this policy stand of the FSC will take effect retrospectively as from 1 January 2022.
Therefore the requirement of carrying out the core income generating activities in or from Mauritius would only apply to a holder of a Global Business Licence if it avails or intends to avail itself of the preferential tax advantages set out in the Income Tax Act.