The same dividend, three companies

The shop

Asha Reed runs a family sugar office in Ebène. The group has just been paid a dividend by a foreign operating company it partly owns. She asks the desk to “put the dividend in whichever Mauritius company pays least.”

Three Mauritius companies are already incorporated. None of these facts is a real client. Reed & Cane Ltd is a domestic company. It trades here, employs staff here, and holds no Global Business Licence. Reed & Cane International Ltd holds a Global Business Licence. Reed & Cane Authorised Ltd holds an Authorised Company permission. Each company is a separate taxpayer. Each will be offered the same cash amount, on the same day, from the same foreign payer, under a board resolution that simply says “pay the Mauritius group.”

The shop’s mistake is already in that sentence. “The Mauritius group” is not a taxpayer. The dividend has to land in a company that is a shareholder of the payer, on a resolution of that payer, into a bank account of that shareholder. A slide that shows three logos and one arrow does not choose the shareholder.

The week

Monday. Asha brings the foreign company’s draft dividend voucher. The payee line is blank. She says the Global Business company should receive it, because “that is the three per cent company.”

Tuesday. The Authorised Company’s administrator sends a one-line email: the company is non-resident, so “there is nothing to file in Mauritius.” He attaches the FSC permission and nothing else.

Wednesday. The domestic company’s accountant points out that Reed & Cane Ltd is the company named on the foreign share register. The other two companies own no shares in the payer. Moving the cash to them after receipt would be a second transaction, with its own company-law and tax file.

Thursday. Asha asks whether partial exemption can be claimed by all three, because the cash is “foreign.” The schedule item she has in mind is not on the table. Nobody has yet said what kind of income this is in the hands of the recipient, or whether the conditions for any exemption are met.

Friday. The foreign payer’s lawyer asks which company is the beneficial owner for the voucher. The desk still has three letterheads and one blank line.

What they ask

Papers next door

The Global Business Licence of Reed & Cane International Ltd is a real permission. It belongs in that company’s licensing file. It does not travel across the group because the logos share a name. The Authorised Company permission belongs in its own file, and the tax question it raises is the one the structures chapter already separates from the fee receipt. A foreign tax credit, if anyone wants to claim one, needs the credit regulations and evidence of foreign tax. It is not claimed by describing the dividend as “foreign” in an email. The France case on this course is a different dividend, with a treaty. Do not borrow Julien’s rates for Asha’s payer.

The statute

Start with the person who receives the income. The Income Tax Act charges that person. An exemption in the Second Schedule applies to income specified there, and only where the conditions for that item are met. Those conditions live in the Income Tax Regulations and are not proved by a licence letter. Section 73A is the Authorised Company provision the structures chapter tells you to read with section 116. Read them. Do not collapse them into “non-resident, therefore nothing.”

This file does not compute the dividend. It stops at the question the shop skipped: which company is the shareholder, and which statutory test applies to that company’s income. The number, if there is one, comes after that.