Mauritius: Apportionment of expenses attributable to non-taxable capital gains

Mauritius: Apportionment of expenses

The Supreme Court of Mauritius held that common expenses that are attributable to non-taxable capital gains are to be disallowed under the apportionment rules.

1000

Related content

The case is: JPMorgan Sicav Investment Co. (Mauritius) Ltd. v. Assessment Review Committee and the Director General of the Mauritius Revenue Authority

Overview

The taxpayer (an investment holding company) held a global business license, and derived income in the form of dividends and interest. It also derived gain on the disposal of investments. The taxpayer treated all its common expenses (expenses relating to taxable income and capital gains) as “allowable expenses.” The tax authority, however, disallowed a portion of the expenses claimed by the taxpayer pursuant to an apportionment formula. 

The Supreme Court of Mauritius noted that capital gains and exempt income are both excluded from the definition of gross income. Thus, expenses considered to be capital in nature and attributable to exempt income are to be disallowed. In concluding, the high court found that a company with non-taxable capital gains cannot claim the tax benefit of deductions of expenses that produce the capital gains.

 

Read a January 2017 report [PDF 282 KB] prepared by the KPMG member firm in Mauritius

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us

 

Request for proposal

 

Submit

KPMG's new digital platform

KPMG International has created a state of the art digital platform that enhances your experience, optimized to discover new and related content.