USES OF MAURITIAN TRUSTS MUHAMMAD UTEEM LLM TEP 1 Mauritius International Financial Services: Onwards & Upwards UTEEM CHAMBERS A Law Firm registered under.

USES OF MAURITIAN TRUSTS

MUHAMMAD UTEEM LLM TEP

1Mauritius International Financial Services: Onwards & Mauritius International Financial Services: Onwards & UpwardsUpwards

UTEEM CHAMBERSA Law Firm registered under the Mauritius Law Practitioner’s Act

INTRODUCTION2

Austin v Bailey (1962) Trusts Act 2001

- Qualified Trustee- Protector- Letters of Wishes- Remedies

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TAX PLANNING3

Tax Incentive Trusts:- the settlor : non-resident

global business licence holder another tax incentive trust 

- all beneficiaries: non-residentglobal business

licence holder

- purpose trust carried out outside Mauritius UTEEM CHAMBERS

RESIDENT TRUSTS4

Access to double taxation treaty network Rate of Taxation: 15% Deemed foreign tax credit: 80% Chargeable Income = net income minus aggregate

amount distributed to Beneficiaries Distribution to non resident Beneficiaries is exempt

from tax. Trusts v/s Companies

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5

Definition of residency:

- trust is administered in Mauritius and- a majority of the trustees are resident in

Mauritius; or- the settlor resident in Mauritius at creation of

trust

Foreign Trust can be resident in Mauritius

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RESIDENT TRUSTS

6

Custodian and Managing Trustees

No need to transfer trusts assets into the name of new managing trustees

Comfort factor for settlor

Costs and tax savings

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RESIDENT TRUSTS

7

0 % tax

declaration of non-residence filed with the Commissioner of Income Tax within 3 months after the expiry of the income year

Use:- Accumulation of Income Trusts. - Special purpose vehicle.

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NON RESIDENT TRUSTS

ASSETS PROTECTION TRUSTS8

Trust assets separate from settlor’s assets

Trust not void or voidable by reason of settlor’s bankruptcy or attack by settlor’s creditors

Court may declare trust void if trust made with the intent to defraud creditors of the settlor at the time when trust property vested in trustee.

Action within 2 years from date of transfer to trust

Court will not enforce a foreign judgment in respect of claims of creditors in an insolvency

Must be planned carefully. Federal Trade Commission v Affordable Media LLC and other (the “Anderson case”)

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FORCED HEIRSHIP RULE9

Restrictions on free disposal of property

the transfer or disposition shall not be set aside

foreign judgment in respect of succession rights not enforceable

Planning Tips: - Succession law. Immovable v/s movable assets - Restriction on disclosure of information- Beneficial interest automatically lapses if Beneficiary

attacks the trust.

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STRUCTURED FINANCE10

Shares Excess

$ Loan Cash

Inflow

Buy

Repayment

Off Balance Sheet Bankruptcy Remote

SPV

Receivables

Assets

Banks

Purpose Trust

Settlor

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LARGE NUMBER OF CREDITORS11

ASIince

$ Security

ng rights

Assignment of Assignment of Security Voting Rights

Creditors free to sell their participations.

BORROWER

TRUST

CREDITORS

CREDITORS

CREDITORS

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PENSION TRUSTS12

ASIince

$

PENSION $

EMPLOYER

TRUST

Emp’ee

Emp’ee

Emp’ee

Invest-ments

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Thank you for your kind attention.

THE END

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