We , an unlisted public ltd co (family run) have a wos at Mauritius, who in turns have (a) another wos as well as (b) 70% stake in another company in Mauritis. That company also holds 90% stake in one Africa compan ,where an Indian individual holds 10%.
Now, we would like to shift these 2 step down subsidiary cos from Mauritius to Dubai. What is compliance part on the part of Indian parent. We are not disturbing our own wos at Mauritius?
Pl guide
Got it, you want to move your two step-down subsidiaries from Mauritius to Dubai, while keeping the Mauritius WOS intact. Here’s a breakdown of the key compliance and tax considerations for your Indian parent company:
You have an Indian parent company → Mauritius WOS → Two subsidiaries in Mauritius (one wholly owned, one 70% owned) → African company (90% owned by Mauritius subsidiary, 10% Indian individual).
Now you want to move the two Mauritius subsidiaries to Dubai (i.e., change their jurisdiction).
Your Indian parent company needs to consolidate the financials of the foreign subsidiaries (Mauritius and Dubai) as per Indian Accounting Standards (Ind AS 110) on Consolidated Financial Statements.
Change in subsidiary’s country of incorporation or control should be disclosed as part of significant events.
Under Schedule FA of the Indian Income Tax Return, the Indian parent company must disclose investments and holdings in foreign subsidiaries.
If the subsidiaries shift from Mauritius to Dubai, you must update details such as country, name, and stake held.
Any change in foreign investment must comply with the Foreign Exchange Management Act (FEMA), including reporting to RBI via Annual Return on Foreign Liabilities and Assets (FLA Return).
The Indian company must continue reporting its foreign investments correctly.
This usually involves either:
Incorporation of new entities in Dubai and transfer of shares/assets of Mauritius subsidiaries to Dubai entities (share sale or asset transfer), or
Redomiciliation, if allowed under Mauritius/Dubai laws.
The Indian parent should check the tax implications of transferring shares or assets in Mauritius to Dubai.
Mauritius has a favorable tax treaty with India (DTAA), but Dubai/UAE is not yet on the DTAA list with India (as of now, no comprehensive DTAA).
If shares are transferred from Mauritius to Dubai entity, capital gains tax implications may arise in Mauritius and/or India depending on tax residency and treaty provisions.
Make sure to structure the transfer to minimize tax leakage.
Indian transfer pricing regulations will apply if there are cross-border transactions between Indian parent and foreign subsidiaries or between foreign subsidiaries.
Update foreign investment disclosures (Schedule FA) to reflect the change in country of subsidiaries.
Continue to file Annual FLA returns reporting foreign assets.
Review tax treaty benefits applicable to Mauritius vs Dubai subsidiaries.
Ensure board and shareholder approvals for restructuring transactions.
Keep track of any capital gains tax on transfer of Mauritius subsidiaries.
Review and update transfer pricing documentation for international transactions.
Since you are not disturbing the Mauritius WOS, its ownership remains unchanged.
You just need to correctly report the shift of the two step-down subsidiaries under your foreign asset disclosures and comply with FEMA and tax rules.
| Aspect | Key Points |
|---|---|
| Financial Reporting | Consolidate, disclose change in subsidiary jurisdiction |
| Income Tax | Update Schedule FA disclosures; check CG tax and treaty impacts |
| FEMA | Report changes in foreign investments in FLA returns |
| Transfer Pricing | Compliance for cross-border transactions |
| Corporate Approvals | Obtain necessary approvals for restructuring |
Hey Jayanta! Moving your two step-down subsidiaries from Mauritius to Dubai while keeping your Mauritius WOS intact is a significant restructuring. Here’s a clear rundown of the key compliance points from the Indian parent company’s perspective:
Schedule FA (Foreign Assets) in ITR: Your Indian parent company must disclose its holding in foreign subsidiaries. Since you’re shifting the two subsidiaries from Mauritius to Dubai, update the country and entity details accordingly in the next Income Tax Return (ITR).
If the assessment for the year is already completed, disclose this change in the next assessment year.
Annual Return on Foreign Liabilities and Assets (FLA Return): You must report the foreign investment and its changes annually to RBI. Update the foreign entity details (new jurisdiction: Dubai) accordingly.
Ensure that all shareholding changes or transfers comply with FEMA regulations and notify the authorized dealer bank if required.
Obtain board approvals and possibly shareholder approvals for any restructuring or transfer of shares related to shifting subsidiaries.
If you are incorporating new Dubai subsidiaries and transferring assets/shares from Mauritius entities, proper legal documentation and due diligence is needed.
Capital Gains Tax: If you transfer shares from Mauritius companies to Dubai companies (either by share sale or merger), check for any capital gains tax liability in Mauritius and India.
Double Tax Avoidance Agreement (DTAA): Mauritius has a DTAA with India; Dubai/UAE currently does not. So, changing jurisdiction may impact treaty benefits on dividends, capital gains, or other income.
Transfer Pricing: Keep transfer pricing documentation ready for any international transactions between Indian parent and foreign subsidiaries.
Your Indian parent company must continue to consolidate financials of foreign subsidiaries and disclose changes in subsidiary structure and country in its financial statements.
Comply with Indian Accounting Standards (Ind AS 110) for consolidation and disclosure.
| Compliance Area | Key Requirement |
|---|---|
| Income Tax | Update Schedule FA disclosures; watch capital gains tax |
| FEMA | Report changes in FLA Return; comply with RBI guidelines |
| Corporate Approvals | Board/shareholder approvals for restructuring |
| Tax Treaties | Evaluate impact of losing Mauritius DTAA benefits |
| Financial Reporting | Consolidate and disclose foreign subsidiary changes |
Coordinate with your tax advisors in India, Mauritius, and Dubai for smooth execution.
Review legal formalities in Mauritius and Dubai for transferring subsidiaries.
Keep proper documentation to avoid future scrutiny from tax authorities.
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