Further to our article dated 1 July 2015 in which we reported on the revised treaty between South Africa and Mauritius which will come into effect from the 1 January 2016 in which we raised the uncertainty surrounding companies with dual residency which will now be decided by ‘Mutual agreement’ by the two states, we now look more closely at the memorandum of understanding between the two countries which has been signed in order to clarify the controversial issue of residence.
The memorandum of understanding was signed on the 22 May 2015 and sets out the corporate residence tie-breaker test which will be used. Factors contained in the MoU that the two states will use to determine a company’s residence include;
– Where the meetings of the directors are usually held
– Where the CEO and other senior executives usually carry out their activities
– Where senior day to day management takes place
– Where the headquarters are located
– Which country’s laws govern the legal status of connected persons
– Where the accounting records are held
– Any other factors that may be identified and agreed upon by the competent authorities in determining residence
Whilst the memorandum does deal with many points surrounding the question of residence it does not completely remove the uncertainty over could potentially be a slow process whereby the two states may reach their mutual agreement.
If you have any concerns over how the above may affect either existing structures or foreseeable futures please do not hesitate to contact us and we will be happy to advice.
