The legal framework for trusts is contained in the Trust Act 2001 which is considered to be very modern and attractive. The Trust Act provides for resident and non-resident trusts and the following details apply to non-resident trusts.
Key features of Mauritius trusts
There is possibility to accumulate income for any period within the duration of the trust;
A trust may carry on a qualified Global Business once a category 1 licence has been obtained;
A trust may not apply for a GBC2 Licence.
Recognition of a foreign trust
A foreign trust will be governed by and interpreted in accordance with the terms of the trust and its proper law. It may be registered in Mauritius provided that the terms of the trust are in compliance with Mauritian law.
Forced heirship rules
The forced heirship rule of Mauritius does not apply to trusts set up by non Mauritian nationals.
Type of trusts
Protective or spendthrift trusts.
Charitable trusts.
Purpose trusts.
Duration
A Charitable trust may be of perpetual duration;
A Non Charitable purpose Trust shall have duration not exceeding 25 years;
All other trusts shall have duration not exceeding 99 years;
Creation and registration of trusts
A trust may be created by a disposition of property inter vivos or by will or by holding property on trust. A trust other than a Unit trust, a Constructive or a Resulting trust or any trust arising by operation of law or by judicial decision can only be created by an instrument in writing.
The trust need not be registered with any governmental body but it is advisable to register with the Registrar General to get a “date certaine”.
Proper law
The proper law of a trust is the one indicated by the settlor or the one implied in the trust deed. Where no such law is expressed then the proper law shall be the one which has the closest connection at the time of creation of the trust.
Settlor
Any person who has the legal capacity to contract may create a trust. A settlor may be a trustee, a beneficiary, a protector or an enforcer, but shall not be the sole beneficiary of a trust of which he is a settlor.
Beneficiary
A beneficiary is any person entitled to benefit under a trust. The terms of the trust may provide for the addition of a person as beneficiary or for the exclusion from benefit of a beneficiary; or impose an obligation upon a beneficiary as a condition of benefit.
Trustees
A person having legal capacity to contract or a body corporate permitted under its statute may act as trustee. A trustee shall not hold a beneficial interest in a trust of which he is a trustee except where he is not the sole trustee or sole beneficiary under the trust.
Protector
The trust instrument may appoint a protector and unless otherwise provided in the terms, the protector shall have the power to remove a trustee and to appoint a new or additional trustee, determine the jurisdiction for the proper law.
Enforcer
An enforcer may be appointed under the terms of a purpose trust whose duty shall be to enforce the trust in accordance with its terms and purposes.
Confidentiality and disclosure
Except where ordered by the court, a trustee shall keep as confidential and shall not be required to disclose to any person not legally entitled to it, or be required to produce or divulge to any court, tribunal, committee of enquiry or other authority in Mauritius or elsewhere, any information or document in his possession or under his control.
Taxation
A trust may by depositing a declaration of non-residence to the Commissioner of Income Tax be exempt from Income tax in respect of an income year. Those trusts which do not opt to be non-resident are taxable at 15% per annum. However, the trust will be entitled to either a tax credit amounting to the actual foreign tax suffered or to a deemed tax credit of 80 per cent of the Mauritian tax on their foreign source income, whichever is higher.
Statutory provisions for asset protection trusts
Notwithstanding Mauritian or foreign law, the validity of trusts set up for the benefit of the settlor, his spouse or children will not be affected because of the settlor’s bankruptcy or the liquidation of his property. If a creditor proves beyond doubt that the settlor’s intent was to defraud creditors then the court may declare the trust void or voidable. The time limit to make a claim is 2 years from settling the asset into the trust.
