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Capital gains booked by PEs won't be taxed in Mauritius, clarifies regulator MRA

Economic Times  

The Mauritius Revenue Authority (MRA) has clarified that any income which is distributed by a foreign "fiscally transparent entity" will retain its initial character in Mauritius. Thus, capital gains booked by a PE Fund in India, where a Mauritius vehicle has invested, will remain capital gains when funds are distributed by the PE to the Mauritius entity. A few days ago, MRA ruled that investment vehicles in Mauritius, used by global investors to enter India, will have to pay tax in Mauritius on 'capital gains' they receive from a PE or debt fund in India when the latter exits an investment. Till now, a Mauritius entity paid tax to the Mauritius government only on 'income flows', like dividends and interest distributed by funds in India --- but not on capital gains booked in India.