Section 90: Transactions designed to avoid liability to income tax

90. Transactions designed to avoid liability to income tax (1) This section shall apply where any transaction has been entered into or effected and that transaction has, or would have had, but for this section, the effect of conferring a tax benefit on a person, hereinafter referred to as relevant person, and having regard to— (a) the manner in which the transaction was entered into or carried out; (b) the form and substance of the transaction; (c) the result in relation to the operation of this Act that, but for this section, would have been achieved by the transaction; (d) any change in the financial position of the relevant person that has resulted, will result, or may reasonably be expected to result, from the transaction; (e) any change in the financial position of any person who has, or has had, any connection, whether of a business, family or other nature, with the relevant person, being a change that has resulted or may reasonably be expected to result from the transaction; (f) whether the transaction has created rights or obligations which would not normally be created between persons dealing with each other at arm’s length under a transaction of the kind in question; and [Issue 6] I5 – 50 Revised Laws of Mauritius (g) the participation in the transaction of a corporation resident or carrying on business outside Mauritius, the Director-General may conclude that the person, or one of the persons, who entered into or carried out the transaction, did so for the sole or dominant purpose of enabling the relevant person, alone or in conjunction with other persons, to obtain a tax benefit. (2) Where subsection (1) applies, the Director-General shall assess the liability to tax of the relevant person— (a) as if the transaction or any part thereof had not been entered into or carried out; or (b) in such other manner as the Director-General considers appropriate to counteract the tax benefit which would otherwise be obtained. (3) For the purpose of this section— “tax benefit” means the avoidance or postponement of the liability to pay income tax or the reduction in the amount thereof; “transaction” includes a transaction, operation, or scheme whether or not such transaction, operation, or scheme is enforceable, or intended to be enforceable, by legal proceedings. PART VIII – RETURNS, COLLECTION AND PAYMENT OF TAX