The basis of the dispute before the Assessment Review Committee was a multi-million-dollar assessment raised by the Mauritius Revenue Authority for tax on deemed interest on an intra-group transaction under Section 75 of the Income Tax Act. Whilst the MRA argued that interest should be applied at a commercial rate on the specific transaction (the arm’s length principle), in defence the taxpayer’s team argued that the transaction was to be viewed holistically taking into account the substance of the transaction, the intention of parties directly and indirectly involved in the transaction as well as related agreements and documentation. The defence also contended that foreign tax credit is to be allowed on a source by source basis against tax on the gross deemed interest. The dispute was settled following intense negotiations with the MRA involving technical and factual arguments.
Delighted with the outcome Appleby’s Yahia Nazroo said “We are delighted to have worked alongside PwC and Razi to reach this outcome. It demonstrates our expertise in assisting clients in complex litigation of this nature.”
The client added “I highly commend the team for their technical expertise, negotiation and advocacy skills and their client service.”