On 16 May 2025, the Supreme Court (SC) ruled against the Mauritius Revenue Authority (MRA) in the Rogers Aviation International case (2025 SCJ 203).
Background:
Rogers Aviation International Ltd ('RAIL'), holds a Global Business licence and acts as General Sales Agent ('GSA’) for various airlines in other territories, where air tickets are sold through appointed sub-agents. RAIL derives an ‘overriding commission’ based on an agreed percentage of the sales generated while the sub-agents are paid a service fee. RAIL monitors the whole sales operation from Mauritius, compiles all the documents and submits reports at regular intervals to the airlines.
For the taxable periods November 2017 to June 2019, RAIL declared zero-rated supplies in its VAT returns and claimed input tax credit in full. The MRA considered that the sale of air tickets by the company is outside the scope of the VAT Act since the provision of the service of sales of air tickets for the airlines is made outside Mauritius and issued a Notice of Assessment accordingly. The assessment was maintained at objection level but quashed by the Assessment Review Committee ('ARC').
ARC level:
The ARC ruled in favour of RAIL and concluded that:
- RAIL performed back-office services in Mauritius for the purpose of providing the services of sale of tickets on behalf of the airlines;
- The back-office work done in Mauritius is one element which is an integral part of the other or is ancillary or incidental to the other, i.e., the sales of tickets in the territory and the two elements are not ‘physically and economically dissociable’;
- The term “taxable supply” means services performed or utilised in Mauritius and in the present case, those services include reporting, monitoring, compilation of all documents, amongst others.
Supreme Court level:
The Supreme Court (SC) held that the ARC reached the right conclusion when it found that the supply of services to airlines in accordance with the GSA agreement was not restricted to solely the sales of air tickets in the territory but also included the monitoring/administration of the sales of air tickets.
According to the SC, this conclusion is further supported by the GSA agreement which specifically mentions that the overriding commission ‘shall be the sole remuneration for all the services rendered by the GSA under this Agreement unless specified in Annex D’.
PwC's comments:
The RAIL case deals with a simple issue of determining whether a supply of services is made in Mauritius or is outside the scope of VAT. Although the VAT Act clearly stipulates that a supply of services is deemed to be made in Mauritius if it is performed or utilised in Mauritius, RAIL struggled to convince the MRA that the monitoring and administration of air tickets in Mauritius ought to be considered as a supply of services made in Mauritius.
The case is a testimony to the challenges faced by taxpayers on interpretation issues and the need to incur costs on litigation in order to resolve issues.
For more information please contact:
Yamini Rangasamy
Associate Director - Tax
yamini.rangasamy@pwc.com
Mobile: +230 5 472 7339 | Office: +230 404 5469
