Attempts to stop the ‘abuse' of a tax treaty between South Africa and Mauritius could have severe implications for the Mauritian economy.
It also remains to be seen whether South African multinationals will relocate their international investment, finance and or group services from Mauritius to South Africa or perhaps elsewhere when the renegotiated tax treaty between the countries takes effect in 2015.
South Africa signed a new tax treaty with Mauritius earlier this month. This follows indications by the South African Revenue Service (Sars) and National Treasury that the old treaty was abused and led to an erosion of the tax base.
Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.