QUESTION

(a) List eight main objectives of tax treaties

(b) Explain carefully how cases of dual residence for both individuals and companies would be resolved by the application of the relevant provisions of a tax treaty based on the OECD model

(c) Xiang Construction Ltd, a company from the Republic of China engaged in the construction of buildings has been awarded a contract by the Government of Mauritius to erect a cultural centre at Pailles. The construction will last for a period of 14 months

Required:

(i) Will the Chinese company be assessable to Mauritius income tax? If so, on what profits and at what rate?

(ii) As regards the personnel of the Chinese company involved in the construction, will they be subject to Mauritius income tax?

Give reasons for your answers

(d) A Mauritian resident company received royalties of Rs 9 million (net after foreign tax) from a foreign country during the income year 2008/2009. No double tax treaty exists between Mauritius and the foreign country and the royalties have been subject to income tax at source at the rate of 12%

Required:

Calculate the amount of income tax that is payable by the Mauritian company to the Mauritius Revenue Authority (MRA) on the royalties assuming that the company has no expenditure that can be deducted against the royalties

(e) During the income year 2008/2009 a Mauritian resident received dividends from overseas as follows:

                      From Australia                  Rs 880,000 (net after Australian tax @ 12%)
                      From New Zealand            Rs 450,000 (net after New Zealand tax @ 10%)

Required:

Calculate the amount of Mauritius income tax which is payable on the foreign dividends given that the Mauritian resident has already deducted all his allowable deductions against his Mauritian source income