CRS: Mauritius Increases Monetary Penalties
Mauritius issued new regulations on April 23, 2019 that amend the Income Tax (Common Reporting Standard) Regulations 2018. The new regulations increase monetary penalties, address anti-avoidance schemes, and provide greater details on dormant accounts.
Monetary penalties have been increased under the new regulations. Specific penalties are assigned to particular forms of Common Reporting Standard (CRS) non-compliance including:
Continued failure to comply
Reporting inaccurate information
The monetary penalties are in the range of 5000 Mauritius rupees to 120,000 Mauritius rupees which translate into approximately US $125 to US $3000. The new regulations do not eliminate the potential imprisonment of up to six months.
Parties are provided an opportunity to demonstrate – to the Director General’s satisfaction – that there is a reasonable ground for non-compliance.
The new regulations add a section on anti-avoidance schemes but do not provide examples of anti-avoidance schemes. Instead, a blanket statement regarding “any arrangement” is made. This statement is qualified by requiring that even if only one of the main purposes of the arrangement is anti-avoidance, the arrangement will in effect be null and void.
Where . . . “The main purpose, or one of the main purposes, of the person in entering into the arrangement is to avoid any obligation under these regulations, these regulations shall have effect accordingly as if the arrangement had not been entered into.”
A dormant account is an excluded account under the Mauritius regulations. The new regulations expand the definition of a dormant account to require additional conditions.
An account was considered dormant if there were no customer initiated transactions or customer communications with the FFI on the particular account. The new regulations further require that the lack of customer initiated transactions or client communications to the Financial Institution (FI) include all accounts held by the Account Holder at the FFI not just the one account in question.
The previous regulations indicated that an account would no longer be considered dormant if it was “reactivated in some way.” The new regulations provide greater detail regarding reactivation:
The Account Holder initiates a transaction on any account held by the Account Holder at the FI.
The Account Holder communicates with the FFI regarding any account held by the Account Holder at the FI.
The account is no longer considered a dormant account under applicable laws or regulations or the FI’s normal operation procedures.
Reminder: The Mauritius deadline for CRS reporting is July 31, 2019.
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