Mauritius: Law of Offshore
The Trusts Act 2001
The Trusts Act 2001 replaced the following Acts which were repealed:
- The Trusts Act 1989;
- The Trust Companies Act 1989; and
- The Offshore Trusts Act 1992.
The following is a summary of some of the more important features of the new Act.
The Act sets a maximum duration of 99 years for trusts other than purpose trusts (25 years) and charitable trusts (may be perpetual), and permits the accumulation of income (limited to 25 years if immovable property in Mauritius is involved).
A settlor may also be a trustee, a beneficiary, a protector or an enforcer, but may not be the sole beneficiary of a trust of which he is a settlor.
A transfer or disposition by a non-citizen can not be set aside, avoided, or otherwise declared invalid or ineffective by virtue of any rule or law of his domicile or nationality relating to inheritance or succession or any rule or law of a similar nature, or any rule or law restricting the right of a person to dispose of his property during his lifetime so as to preserve such property for distribution at his death, or any rule or law having similar effect.
Trusts are irrevocable notwithstanding any provision of the Bankruptcy Act, or any other law of Mauritius or any rule of law of any other jurisdiction or the fact that the trust is voluntary, and is effected without consideration, or is made on or for the benefit of the settlor, the spouse or children of the settlor, or any of them. A trust shall not be void or voidable, or otherwise invalidated in the event of or by reason of the settlor's bankruptcy or liquidation of his property or in any action or proceedings against the settlor at the suit of his creditors.
However the Court may declare a trust void, where it is established that the trust was made with the intent to defraud persons who were creditors of the settlor at the time when the trust property was vested in the trustee. No such action can be undertaken after more than 2 years from the date of the transfer or disposal of the assets to the trust.
Notwithstanding any rule or law relating to enforcement of judgments given by the court of another jurisdiction, where the law of Mauritius is the proper law of a trust, the Court shall not vary it or set it aside or recognise the validity of any claim against the trust property pursuant to the law of another jurisdiction or the order of a court of another jurisdiction in respect of:
- the personal and proprietary consequences of marriage or the dissolution of marriage;
- succession rights (whether testate or intestate) including the fixed shares of spouses, ascendants and descendants or relatives; or
- the claim of creditors in an insolvency.
Protective or spendthrift trust are allowed for. The terms of a trust may make the interest of a beneficiary subject to termination, restriction on alienation of or dealing in that interest or any part of that interest, or dimunition, suspension or termination, in the event of the beneficiary becoming insolvent or any of his property becoming liable to seizure or sequestration for the benefit of his creditors and such trust shall be known for the purposes of this Act as a protective or spendthrift trust.
A purpose trust must have an enforcer whose duty is to enforce the trust in accordance with its terms and purposes.
The settling of immovable property in Mauritius on a trust of which a non-citizen is a beneficiary requires the approval of the Prime Minister under the Non-Citizens (Property Restriction) Act.
The Act allows for a protector of a trust to be appointed. His functions will be to advise the trustee of the trust. The exercise by the trustees of any of their powers and discretions shall be subject to the prior consent of the protector. The trust instrument may appoint as protector any person of full age and of sound mind, including the settlor, or any body corporate, any firm, partnership or group of persons, whether incorporate or unincorporate. The protector has a range of other powers and may also be a settlor, a trustee or a beneficiary of the trust.
The Act provides for the appointment of a custodian trustee which shall be a firm, a partnership or a body corporate and who will act on the instructions of a managing trustee.
The Act provides for the appointment of a managing trustee having the role and functions to manage the trust without being vested with the trust property which is vested in a custodian trustee.
The settlor or beneficiary of a trust may give to the trustees a letter of his wishes or the trustees may prepare a memorandum of the wishes of the settlor with regard to the exercise of any functions conferred on the trustees by the terms of the trust.
The number of trustees of a trust shall not exceed 4 of whom, at any one time, at least one shall be a qualified trustee.
Except where ordered by the Court or a Judge in Chambers a trustee shall keep as confidential and shall not be required to disclose to any person not legally entitled to it or be required to produce or divulge to any Court, tribunal, committee of enquiry or other authority in Mauritius or elsewhere, any information or document in his possession or under his control relating to:
- the state and amount or any other details of the trust property;
- the conduct of the trust administration;
- the trustee's deliberations as to the manner in which a power or a discretion was exercised, or a duty conferred or imposed by the law or by the terms of the trust was performed;
- the reason for any particular exercise of such power or discretion or performance of duty or the material upon which such reason will be or might have been based; or
- the exercise or proposed exercise of such power or discretion or the performance or proposed performance of such duty.
However, these secrecy provisions are heavily compromised by a series of qualifications in respect of money laundering, international mutual assistance treaties etc.
In most respects, the Act inherited tax privileges granted under previous acts, and Section 46 of the Income Tax Act 1995 was amended accordingly:
- Subject to section 7 and subsections (2) and (3) of this section, every trust shall be liable to income tax on its chargeable income at the rate specified in Part III of the First Schedule.
- A trust of which
- the settlor is a non-resident; and
- all the beneficiaries appointed under the terms of the trust are, throughout an income year, non-resident, or hold a Category 1 Global Business Licence or a Category 2 Global Business Licence under the Financial Services Development Act 2001
- shall be liable to income tax on its chargeable income at the rate specified in Part II of the First Schedule.
- Where a trust which qualifies under subsection (2) deposits a declaration of non-residence for any income year with the Commissioner within 3 months after the expiry of the income year, it shall be exempt from income tax in respect of that income year.
- The chargeable income under subsections (1) and (2) shall be the difference between:
- the net income derived by the trust; and
- the aggregate amount distributed to the beneficiaries under the terms of the trust.
- Any amount distributed to the beneficiaries under the terms of the trust shall be deemed to be a charge under section 10(1)(d) and shall be liable to income tax in the hands of the beneficiaries.
- Notwithstanding subsection (5), a non-resident beneficiary of a trust shall be exempt from income tax in respect of his income under the terms of the trust.