Trusts for Residents - the Uteem Chambers website
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Transcript Trusts for Residents - the Uteem Chambers website
USES OF MAURITIAN TRUSTS
MUHAMMAD UTEEM LLM TEP
UTEEM CHAMBERS
A Law Firm registered under the Mauritius Law Practitioner ’s Act
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Mauritius International Financial Services: Onwards & Upwards
INTRODUCTION
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Austin v Bailey (1962)
Trusts Act 2001
- Qualified Trustee
- Protector
- Letters of Wishes
- Remedies
UTEEM CHAMBERS
TAX PLANNING
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Tax Incentive Trusts:
the settlor :
non-resident
global business licence holder
another tax incentive trust
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all beneficiaries: non-resident
global business licence holder
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purpose trust carried out outside Mauritius
UTEEM CHAMBERS
RESIDENT TRUSTS
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Access to double taxation treaty network
Rate of Taxation: 15%
Deemed foreign tax credit: 80%
Chargeable Income = net income minus aggregate
amount distributed to Beneficiaries
Distribution to non resident Beneficiaries is exempt
from tax.
Trusts v/s Companies
UTEEM CHAMBERS
RESIDENT TRUSTS
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Definition of residency:
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trust is administered in Mauritius and
a majority of the trustees are resident in
Mauritius; or
the settlor resident in Mauritius at creation of
trust
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Foreign Trust can be resident in Mauritius
UTEEM CHAMBERS
RESIDENT TRUSTS
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Custodian and Managing Trustees
No need to transfer trusts assets into the name of new
managing trustees
Comfort factor for settlor
Costs and tax savings
UTEEM CHAMBERS
NON RESIDENT TRUSTS
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0 % tax
declaration of non-residence filed with the
Commissioner of Income Tax within 3 months after
the expiry of the income year
Use:
- Accumulation of Income Trusts.
- Special purpose vehicle.
UTEEM CHAMBERS
ASSETS PROTECTION TRUSTS
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Trust assets separate from settlor’s assets
Trust not void or voidable by reason of settlor’s
bankruptcy or attack by settlor’s creditors
Court may declare trust void if trust made with the intent
to defraud creditors of the settlor at the time when trust
property vested in trustee.
Action within 2 years from date of transfer to trust
Court will not enforce a foreign judgment in respect of
claims of creditors in an insolvency
Must be planned carefully. Federal Trade Commission v
Affordable Media LLC and other (the “Anderson case”)
UTEEM CHAMBERS
FORCED HEIRSHIP RULE
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Restrictions on free disposal of property
the transfer or disposition shall not be set aside
foreign judgment in respect of succession rights not
enforceable
Planning Tips:
Succession law. Immovable v/s movable assets
Restriction on disclosure of information
Beneficial interest automatically lapses if Beneficiary
attacks the trust.
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UTEEM CHAMBERS
STRUCTURED FINANCE
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Purpose
Trust
Settlor
Shares
Excess
$ Loan
SPV
Cash
Inflow
Banks
Buy
Repayment
Receivables
Assets
Off Balance Sheet
Bankruptcy Remote
UTEEM CHAMBERS
LARGE NUMBER OF CREDITORS
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ASIince
BORROWER
$
Security
TRUST
ng rights
Assignment of
Assignment of
Security
CRED
ITORS
Voting Rights
CRED
ITORS
CRED
ITORS
Creditors free to sell their participations.
UTEEM CHAMBERS
PENSION TRUSTS
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ASIince
EMPLOYER
TRUST
$
Investments
PENSION $
Emp’ee
Emp’ee
Emp’ee
UTEEM CHAMBERS
THE END
Thank you for your kind attention.
UTEEM CHAMBERS