Tax Perspective

Mauritius has long been the desired offshore platform for channelling investments in emerging markets such as India and countries in Africa. The reforms by the Organisation for Economic Co-operation and Development (OECD) some years ago, ranging from the Base Erosion Profits Shifting (BEPs) Project to the introduction of the GloBE rules have undermined such attractiveness.​

We have, nevertheless, thrived our way through those difficult times. The introduction of the Top- up Tax under the GloBE rules will cause the tax rate on the MNEs to rise to 15% in Mauritius, and this will do nothing but create havoc in the industry, causing an exodus of the structures from Mauritius. Why the rush when we are aware that big nations such as India, China and the US are yet to implement the GLoBE rules? ​

Corporates with a chargeable income of above Rs24m will pay a contribution of 5% of their chargeable income. Banks will have another 2.5% tax on their chargeable income from domestic operations.

The Alternative Minimum Tax (AMT) will be re- introduced to ensure a minimum of 10% on the book profits of companies in certain sectors. These measures will only add to the already heavily burdened tax scenery for companies.​

Elimination of double taxation on dividend is an international norm that most countries follow, and it is unfortunate that Mauritius is again adopting the easy route of imposing tax on “exempt dividend”. ​

The Mauritius Revenue Authority (MRA) will introduce a one-off Tax Dispute Settlement Scheme (TDSS).

The main incentive under the scheme is a 100% waiver of interest and penalties for taxpayers withdrawing their cases presently under dispute. Indeed, it is critical for the MRA to reduce the cash tied up in long outstanding tax cases. However, it is questionable whether the re- introduction of TDSS will have the desired outcome when we are aware that many tax assessments do not have a solid basis. And a waiver of the penalty and interest alone might not be sufficient. ​

The Voluntary Disclosure Settlement Scheme (VDSS) and Tax Arrears Settlement Scheme (TASS) will be opportunities for taxpayers to settle their dues with the MRA with a complete waiver of penalty and interest. ​

The power to raise tax assessments will now be restricted to only two years. We welcome this measure as this will render the process of a tax audit less burdensome.​

Specific digital or electronic services provided by foreign suppliers will be subject to VAT with effect from 01 January 2026. This will prove to be a good source of revenue for the government. ​

The threshold for compulsory registration for VAT will be reduced to Rs3m, bringing more businesses within the scope of VAT with added tax compliance requirements for small businesses. ​

The economic environment in the world is going through a difficult phase, and Mauritius is not an exception. It is also true that in this context, every citizen needs to contribute his fair share for the country to prosper. However, it should be a balanced act between increasing government revenue through taxes and promoting investment and growth. Just as a reminder, too much tax kills!