Key Takeaways
- Sales tax in Mauritius operates as a Value Added Tax administered by the Mauritius Revenue Authority, with a standard rate of 15% on taxable supplies.
- Foreign-owned businesses may need to register once they meet the VAT threshold, while voluntary registration can be an option below it.
- Non-resident and digital service suppliers can face VAT obligations, with cross-border services often handled through a reverse-charge mechanism.
- Registered businesses must file VAT returns, claim input tax credits where eligible, keep proper records, and meet compliance duties to avoid penalties.
Understanding VAT (Value Added Tax) in Mauritius
The consumption tax in Mauritius is Value Added Tax, charged at a standard rate of 15% on most goods and services. It replaced the older sales tax regime in September 1998 and operates as a full credit-invoice system administered by the Mauritius Revenue Authority. This is not a jurisdiction without a consumption tax; a complete VAT framework applies to domestic supplies and to imports.
VAT reaches any taxable supply of goods or services made within the country by a registered person in the course of business. It also attaches to goods brought into the country, whether or not the importer carries on a taxable activity.
This article explains how the tax works for a foreign-owned business: registration rules, rates, exemptions, input credits, filing duties, the treatment of cross-border digital services, and the penalties for getting it wrong. The detail matters most to non-resident owners, investors, and advisers weighing whether to incorporate locally or supply customers there from abroad.
Legal Basis: The VAT Act and the Mauritius Revenue Authority's Role
The governing statute is the Value Added Tax Act 1998, supported by the Value Added Tax Regulations 1998. The most significant recent change sits in section 61 of the Finance Act 2025, which amended that Act to bring foreign digital suppliers into the net and to refine several operating rules.
The Mauritius Revenue Authority (MRA) runs the system end to end. It handles registration, collects the tax, processes refunds, and conducts assessments and audits.
Two schedules to the Act do most of the categorisation work. Zero-rated supplies appear in the Fifth Schedule, while exempt supplies are set out in the First Schedule; the rules covering foreign digital services live in Part III of the Tenth Schedule.
Other statutes touch the wider transactional picture, including the Land (Duties and Taxes) Act, the Registration Duty Act, and the Mauritius Revenue Authority Act. For a foreign owner, the VAT Act and its schedules are the documents that determine day-to-day obligations.
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VAT Registration Threshold and Voluntary Registration
The compulsory registration threshold was reduced from MUR 6 million to MUR 3 million, effective 1 October 2025. Any person whose annual turnover of taxable supplies exceeds, or is likely to exceed, that figure must apply to the Director-General for registration.
A business below the threshold may register on a voluntary basis. This can suit a firm that incurs significant input VAT and wants to recover it, or one that supplies mainly VAT-registered customers.
Some operators must register regardless of turnover. Holders of a Pleasure Craft Licence for a craft longer than 12 metres fall into compulsory registration on that basis alone.
Foreign suppliers of digital and electronic services face a separate rule with no turnover threshold; registration obligations for that category are covered in a later section.
The MRA provides a simplified registration facility online. A separate electronic invoicing obligation applies to suppliers with annual turnover above MUR 80 million during the 2025-26 fiscal year.
The Standard 15% VAT Rate
The single standard rate is 15%. It applies to all goods and services supplied by a registered entity, other than supplies that are zero-rated or exempt.
There are no reduced rates for ordinary domestic supplies. The structure has three tiers only: standard-rated at 15%, zero-rated at 0%, and exempt.
The same 15% rate reaches digital or electronic services delivered by foreign providers. No concessionary or zero rate exists for that category.
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Zero-Rated Supplies and Exports
Zero-rating means a supply remains taxable but carries a rate of 0%, which preserves the supplier's right to recover input tax. Exported goods are zero-rated as a general rule, and certain locally supplied goods and services also qualify; the full list sits in the Fifth Schedule. Supplies that would otherwise be exempt are treated as zero-rated when exported.
Recovery of input tax is proportionate where a business is not mainly engaged in zero-rated activity. The repayment is limited to the share that zero-rated supplies bear to total taxable supplies in the relevant period.
Capital expenditure receives specific treatment. A registered person may claim repayment where the excess input tax on buildings, plant, machinery, or equipment of a capital nature exceeds MUR 100,000, and no VAT applies on the import of capital goods worth MUR 500,000 or more.
The VAT refund scheme for residential construction or purchase was withdrawn from 30 June 2025.
Exempt Supplies Outside the VAT Net
Exempt supplies carry no VAT, and the supplier cannot recover input tax attributable to them. This is the key practical difference from zero-rating, which permits recovery. The First Schedule lists the exempt categories.
According to PwC's tax summary, the main exempt categories include:
- Medical, hospital, dental, clinical laboratory, and veterinary services
- Educational and training services from institutions approved by the Mauritius Qualification Authority
- The sale or transfer of a building for residential purposes
- Banking services supplied to non-residents and to holders of a Global Business Licence by a bank licensed under the Banking Act 2004
- Wheat and cereal flours (excluding wheat flour), and essential items such as noodles, toothpastes, and toothbrushes
- The making, advancing, or granting of credit, and the management of credit guarantees, with credit card services excluded
A targeted exemption covers goods related to sports activities received as donations from abroad by a National Sports Federation. Input tax credit is not available for rented parking used by non-business motor vehicles.
The banking exemption is the one foreign investors notice first, since it shapes the cost base of financial services directed at non-resident clients and Global Business companies.
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Taxable Supplies, Input Tax Credits and How VAT Is Charged
Every registered person who makes a sale must issue a VAT invoice for that transaction. The invoice has to show, at minimum, the business name and address, the VAT Registration Number, and the Business Registration Number, along with the VAT amount and rate.
The mechanism rests on two figures. VAT charged on your sales is output tax; VAT charged to you by your suppliers is input tax. Input tax is deducted from output tax, and where input exceeds output, the surplus may be refunded or carried forward, with refunds paid by bank transfer.
Several restrictions limit what can be recovered. Input tax credit is denied for motor cars and other vehicles built to carry no more than nine persons, and for their maintenance and repair.
VAT on digital or electronic services paid by a taxable person in Mauritius is not deductible, a departure from the usual credit principle that foreign-owned firms buying such services should price in.
Credit can also be disallowed where the proportion for mixed taxable and exempt supplies is wrong, where a claim lacks a proper VAT invoice or Customs declaration, or where repayment is sought on input tax already used to offset output tax.
Filing VAT Returns and Making Payments
Filing frequency depends on turnover, and both returns and payments are handled electronically.
| Annual taxable turnover | Filing frequency | Deadline |
|---|---|---|
| Over MUR 10 million | Monthly | End of the month following the taxable month |
| MUR 10 million or below | Quarterly | Within 20 days after the quarter ends |
| Foreign digital suppliers | Per reporting period | By the 20th of the following month |
Quarterly periods end on 31 March, 30 June, 30 September, and 31 December. The monthly obligation kicks in automatically once turnover crosses MUR 10 million.
The MRA may raise assessments for non-declaration, under-declaration of supplies, or overstatement of input tax credit for a period beyond two years but not exceeding four years. A Budget 2026-27 proposal would reduce the window for requesting unclaimed input VAT credits to 24 months.
VAT on Non-Resident and Digital/Electronic Service Suppliers
The Finance Act 2025 brought foreign digital suppliers directly into the VAT system. From 1 January 2026, all foreign suppliers of digital and electronic services must register and charge VAT at 15%, unless they have a permanent establishment locally or account through the reverse-charge mechanism.
No turnover threshold attaches to this registration requirement under the enacted rule. The trigger is the supply itself, not the value of supplies.
In-scope services are broadly defined. They include:
- E-books, photographs, screensavers, and other images or texts
- Music, films, television, games, and on-demand programmes
- Applications, software, and software maintenance
- SaaS subscriptions, online advertising, and e-learning platforms
- Cloud computing, hosting, and digital marketplace or app-store intermediary services
Determining customer location follows an indicator test. A customer counts as resident locally when two non-contradictory indicators align, such as billing address, bank location, IP address, or SIM card country code.
A foreign supplier whose taxable turnover exceeds MUR 3 million must appoint a tax representative with a permanent establishment in the country, who files returns and remits payment to the MRA. Foreign digital suppliers cannot claim input VAT.
Analysis by Bowmans sets out the framework in detail. Budget 2026-27 proposals would relax the rule: a foreign supplier dealing exclusively with VAT-registered customers would not need to register, since reverse charge applies, and registration would not be compulsory below MUR 3 million in annual taxable supplies.
The Reverse-Charge Mechanism for Cross-Border Services
Section 14 of the VAT Act sets out the reverse charge on services received from abroad. It applies to all VAT-registered persons, a point the Finance Act 2025 measures confirmed.
For business-to-business digital services, the Mauritian customer self-assesses 15% VAT as output tax and claims a matching input credit where the service relates to taxable supplies. Both the output and the input figures must appear on the same VAT return.
The treatment splits by customer type. Business-to-consumer supplies require the foreign provider to charge and remit VAT directly, while business-to-business supplies to registered customers stay within reverse charge, even though the foreign supplier's own registration remains mandatory.
Once a foreign supplier is registered locally, the reverse charge stops applying to its supplies. Place-of-supply rules for services used in the country were clarified under the Finance Act 2025.
Penalties, Record-Keeping and Compliance Obligations
Non-compliance carries financial and, in serious cases, criminal consequences. The figures below set out the main exposures for a registered business.
| Default | Standard charge | Small enterprise (turnover up to MUR 10m) |
|---|---|---|
| Late filing | MUR 2,000 per month, max MUR 20,000 | Max MUR 5,000 |
| Late payment | 10% of tax payable | 2% of tax payable |
| Unpaid tax interest | 1% per month until paid | 1% per month until paid |
Failure to register is an offence. On conviction, the penalty can reach three times the tax involved together with imprisonment for up to eight years.
Records must be kept in English or French, electronically or on paper, covering every transaction. Importers and exporters retain copies of their Customs declarations through TradeNet in chronological order, and recipients of goods or services keep their receipts and VAT invoices the same way; all such records must be held for the statutory retention period.
The MRA gained expanded assessment powers under the Finance Act 2025, and a new offence covers failure to provide information or access to electronic devices, punishable by fine and imprisonment.
Conclusion
VAT in Mauritius is simpler in structure than in many jurisdictions, but the reverse-charge mechanism and the registration rules for non-resident digital suppliers mean that a foreign business owner cannot assume distance equals exemption. The single question worth resolving before anything else is whether your specific supply into Mauritius triggers an obligation to register, charge, and remit, because that answer shapes every compliance cost and penalty exposure that follows.
How Expanship Can Help Your Business in Mauritius
Expanship supports foreign-owned companies on VAT from first registration through routine filing, including the digital-services rules that affect non-resident suppliers and the appointment of a tax representative where turnover requires one. The same team handles the wider obligations a foreign entity carries, so VAT sits inside a single compliance picture rather than standing alone.
- Company incorporation and structuring for foreign owners
- Registered agent and registered office services
- VAT registration and preparation of periodic returns
- Ongoing compliance management and statutory filings
- Accounting and bookkeeping aligned with VAT record-keeping rules
- Banking introductions for newly formed entities
To discuss your VAT position or a wider setup, contact Expanship Mauritius.
Frequently Asked Questions
The standard rate is 15%, applied to most goods and services supplied by a registered business. The only alternatives are zero-rating at 0% and exemption; there are no reduced rates for ordinary domestic supplies.
Registration becomes compulsory once annual turnover of taxable supplies exceeds MUR 3 million, a threshold reduced from MUR 6 million effective 1 October 2025. A business below that figure may register voluntarily, which can help where it carries significant recoverable input tax.
Yes. From 1 January 2026, foreign suppliers of digital and electronic services must register and charge 15% VAT with no turnover threshold, unless they have a local permanent establishment or fall under the reverse-charge mechanism. A supplier whose taxable turnover exceeds MUR 3 million must also appoint a tax representative based in the country.
Businesses with annual taxable turnover above MUR 10 million file monthly, by the end of the month after the taxable month. All others file quarterly, within 20 days of each quarter ending on 31 March, 30 June, 30 September, or 31 December.
A penalty of 10% of the tax due applies, reduced to 2% for a small enterprise with turnover up to MUR 10 million. Interest of 1% per month also accrues on unpaid tax from the due date until payment.
No. VAT on digital or electronic services paid by a taxable person locally is not deductible, which differs from the standard credit treatment of input tax. Foreign digital suppliers are likewise unable to claim input VAT.
Legal Disclaimer
The information provided in this article is for general informational purposes only and does not constitute legal, tax, or professional advice. While we strive to ensure the accuracy and timeliness of the content, laws and regulations are subject to change, and the application of laws can vary widely based on specific facts and circumstances.
Readers should not act upon this information without seeking professional counsel tailored to their individual situation. Expanship and its authors disclaim any liability for actions taken or not taken based on the content of this article.
For specific advice regarding your business setup, compliance requirements, or any legal matters, please consult with qualified legal and tax professionals in the relevant jurisdiction.
