view in browser

Mauritius signs the MLI on 5 July 2017

On 5 July 2017, Mauritius signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the “MLI”), an initiative driven by the OECD,  as a key component of their BEPS proposals. In doing so, Mauritius joins 68 other countries including members of the European Union, India and South Africa which already signed the MLI last month. The MLI hails a new era in international tax planning and a significant milestone for the OECD in their objective to tackle tax avoidance on a global scale.

What is Base Erosion and Profit Shifting (BEPS)?

The OECD refers to BEPS as “tax planning strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations where there is a little or no economic activity, resulting in little or no overall corporate tax being paid.”

How did the MLI come about?

In July 2013, the OECD presented the BEPS Action Plans designed to combat the proliferation of BEPS in the world. Action 15 advocated the implementation of a multilateral convention which would modify the tax treaty networks of the signatories in a bid to eliminate what the OECD considers to be harmful practices contributing to BEPS.

What does the MLI do?

It imposes minimum standards to the signatory countries in terms of tax treaties. In a nutshell, the MLI seeks to ensure that profits are taxed where value is created through economic activities carried out in that country.

The MLI contains certain “minimum standards” which are required to be implemented by the BEPS proposals. These “minimum standards” include:

  • Tackling treaty abuse: Through Article 7, the MLI introduces a “principal purpose test” as an anti-avoidance measure aimed at countering treaty abuse/treaty shopping scenarios. One of the essential points of the “PPT” test is that the test looks at structures or arrangements where “one of” the principal purposes rather than the “sole” purpose is tax driven. This may result in treaty benefits being denied in cases where tax is an important factor, albeit not the only important factor in choosing a holding company jurisdiction. 

  •  Making dispute resolution in tax matters, and in particular the Mutual Agreement Procedure between tax authorities, more efficient and effective. 

What is Mauritius’s position on the MLI?

Mauritius has indicated that 23 of its double tax treaties currently in force will be covered by the MLI, together with a commitment to revise the remaining 19 treaties on a bilateral basis to ensure that they comply with BEPS minimum standards. Mauritius has excluded a number of jurisdictions with which it regularly does business with, including Singapore, India, China, Mozambique, Rwanda, Uganda, Namibia, Egypt, Zambia, Botswana and Senegal. It is anticipated that Mauritius will be under significant pressure from the OECD and the EU to renegotiate all those bilateral treaties in a timely manner. 


The MLI will have a dramatic impact on businesses operating in Mauritius and will undoubtedly change the face of traditional tax planning and the use of Mauritius as a holding company jurisdiction. While there has been increased focus on requiring more “substance” through domestic legislation in recent years, it is unlikely that the current legislative framework and the substance requirements currently imposed on global business companies will be sufficient to ensure continued access to treaty benefits. It is crucial for Mauritius to drastically reinvent its IFC framework to ensure that it can withstand the troubled times which lie ahead.

For more information on tax matters, please contact:


Marc Hein

[email protected]


Nicolas Richard

[email protected]

Managing Partner

The information is published for general information purposes and is not intended to constitute legal advice. Specialist legal advice should always be sought in relation to any particular situation. Juristconsult Chambers will accept no responsibility for any actions taken or not taken on the basis of this publication.

Copyright © 2017 All rights reserved. | JUL17 |

Please consider the environment before printing

If you don't want to receive any more emails from us, you can 
click here to unsubscribe