USES OF MAURITIAN TRUSTS MUHAMMAD UTEEM LLM TEP 1 Mauritius International Financial Services:...
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Transcript of USES OF MAURITIAN TRUSTS MUHAMMAD UTEEM LLM TEP 1 Mauritius International Financial Services:...
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
UTEEM CHAMBERS
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
UTEEM CHAMBERS
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
UTEEM CHAMBERS
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
UTEEM CHAMBERS
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.
UTEEM CHAMBERS
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”)
UTEEM CHAMBERS
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.
UTEEM CHAMBERS
STRUCTURED FINANCE10
Shares Excess
$ Loan Cash
Inflow
Buy
Repayment
Off Balance Sheet Bankruptcy Remote
SPV
Receivables
Assets
Banks
Purpose Trust
Settlor
UTEEM CHAMBERS
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
UTEEM CHAMBERS
PENSION TRUSTS12
ASIince
$
PENSION $
EMPLOYER
TRUST
Emp’ee
Emp’ee
Emp’ee
Invest-ments
UTEEM CHAMBERS