Clarifying Income Tax Ruling TR 288: Implications for Remote Consultancy in a Digital Era

The expansion of digital communication and remote working arrangements has reshaped how professional services are delivered across borders. Consultants based overseas can advise Mauritian entities without ever setting foot in the country. While this evolution presents efficiencies and opportunities, it also introduces complex tax considerations that must be addressed with clarity.

Income Tax Ruling TR 288, recently issued by the Mauritius Revenue Authority (MRA), offers useful guidance on the taxation of such cross‑border consultancy engagements. However, it also raises practical and treaty‑based questions that warrant further clarification to ensure smooth compliance for both businesses and foreign consultants.

The ruling was issued in the context of a Mauritian clearing house (“M”), owned by an exchange (“N”), seeking to engage an Indian‑based consultant (“Mr. O”) under a Retainership Agreement. The consultant is expected to deliver advisory and analytical services primarily from India, using electronic communication channels such as emails, virtual meetings, and remote reporting tools. Although the consultant may undertake limited visits to Mauritius, these shall not exceed 90 days per year, and all payments for the services will be made by bank transfer. While the business arrangement appears straightforward, determining the corresponding tax obligations under both domestic law and the Mauritius–India Double Taxation Avoidance Agreement (DTAA) requires a more nuanced examination.

One of the key conclusions of TR 288 is that Tax Deducted at Source (TDS) is not applicable to payments made to the consultant. Because the services are performed entirely outside Mauritius, the income derived does not constitute income arising in Mauritius for domestic tax purposes. This provides significant clarity to Mauritian entities engaging non‑resident consultants, particularly in situations where the services are wholly remote, limiting the administrative burden associated with withholding obligations.

The ruling also confirms that no withholding tax (WHT) applies under Articles 14 (Independent Personal Services) or 15 (Dependent Personal Services) of the Mauritius–India DTAA. Since the consultant does not maintain a fixed base in Mauritius and no employment relationship exists, these provisions do not apply. However, the analysis does not end here. The ruling proceeds to characterise the consultancy fees as “fees for technical services” under Article 12A, which was introduced into the treaty in 2016. Under this provision, such fees may be taxed in Mauritius at a rate not exceeding 10% of the gross amount. Interestingly, such fees can only be taxed in Mauritius under withholding tax method.  Importantly, although the Mauritian payer has no withholding obligation, the tax liability shifts directly onto the non‑resident consultant, who must settle the tax due.

This leads to the next key implication: under Section 112 of the Income Tax Act 1995, the non‑resident consultant must file an income tax return in Mauritius to declare the gross remuneration and pay the applicable tax. This requirement positions the burden of compliance squarely on the consultant rather than on the Mauritian entity. While the ruling provides clarity on the technical tax treatment, the practical implementation of these obligations raises further questions.

One notable area requiring clarification concerns Article 24 of the DTAA, which contains the Non‑Discrimination clause. A question arises as to whether obliging a non‑resident consultant to file a tax return when a Mauritian resident providing comparable services from abroad might not be subject to equivalent administrative obligations, could constitute a more burdensome requirement prohibited under the treaty. Ensuring that non‑residents are not subjected to unfair or unequal treatment is essential for maintaining the integrity and fairness of cross‑border tax administration.

Practical compliance requirements also remain unclear, particularly regarding whether the non‑resident consultant must obtain a Tax Account Number (TAN) before submitting a tax return in Mauritius. If a TAN is indeed required, it is important to clarify the application process, the documents that must be submitted and the timelines involved. These operational details can significantly affect the consultant’s ability to comply, especially given their non‑resident status and physical distance from Mauritius. Additional considerations include whether any special declarations must be completed by non‑resident individuals whether treaty relief documentation is required in connection with Article 12A and what records the Mauritian entity must maintain to demonstrate adherence to the ruling.

In Summary

Income Tax Ruling TR 288 represents a meaningful step toward modernising the tax treatment of remote consultancy services and offers useful certainty to businesses operating in an increasingly globalised environment. However, as the nature of cross‑border work continues to evolve, the practical mechanics surrounding compliance require further administrative clarity. Clear guidance on filing requirements, registration processes and treaty‑based protections would not only reduce compliance risks for taxpayers but also reinforce Mauritius’ commitment to maintaining a transparent and internationally aligned tax framework.

As Mauritius positions itself as a forward‑looking international financial centre, ensuring that both businesses and foreign experts can navigate tax obligations with confidence is critical. TR 288 highlights the need for continued dialogue between taxpayers, practitioners and the MRA to refine and streamline administrative processes. With additional practical guidance, the tax treatment of remote consultancy services can be applied in a manner that is both fair and efficient, supporting the country’s ongoing efforts to remain competitive and compliant in the digital age.