VAT update: New rules for foreign suppliers of digital & electronic services in Mauritius

This change is part of recent updates to the VAT Act introduced under the Finance Act 2025, with the key objective being that digital services consumed in Mauritius are taxed in the same way as services provided locally. The Mauritius Revenue Authority (MRA) will oversee the registration, VAT collection, and compliance process for foreign suppliers of digital and electronic services, helping to ensure a consistent and level playing field for all service providers.

Rationale

• Fairness: Prior to its introduction, foreign digital services had a pricing advantage over local service providers providing similar services, but charging VAT.
• Revenue: Collecting VAT on foreign services strengthens national tax income.

Impacted parties

Foreign suppliers: Any non-resident company or individual supplying digital services in Mauritius.

Local customers: Includes both individuals and businesses

What is considered as a Digital Service?

These are services delivered over the internet or electronic networks, such as:

• Supplies of images or texts, such as photographs, screensavers, electronic books and other digitized documents
• Supplies of music, films, television shows, games and programmes on demand
• Supplies of applications, software and software maintenance
• Website supply or web hosting services
• Advertising space on a website
• Online magazines
• Distance maintenance of programmes and equipment

Key Obligations for foreign suppliers

• VAT Registration: All foreign suppliers must register for VAT in Mauritius, regardless of turnover. Registration is done electronically via the MRA website (www.mra.mu). Required documents include company registration certificates or passports, contact details, correspondence addresses amongst others.
• Charging VAT: Foreign suppliers must charge 15% VAT on taxable digital and electronic services supplied to Mauritian customers.
• VAT Returns & Payments: Returns must be filed monthly or quarterly (depending on turnover), and payments remitted electronically in approved foreign currencies (USD, EUR, GBP, SGD, ZAR, CHF).

Tax Representatives

If annual taxable supplies exceed MUR 3 million, foreign suppliers must appoint a tax representative with a permanent establishment in Mauritius. The said representative would handle VAT returns, payments, and compliance, acting as the official point of contact with the MRA.

Compliance Details

• Determining Customer Location: Suppliers must use at least two non-contradictory indicators (billing address, bank location, IP/geolocation, country code, or other commercial info) to confirm if a recipient is in Mauritius.
• VAT Invoices: Foreign suppliers are not required to issue VAT invoices, but local businesses can still claim input VAT on qualifying purchases.
• Reverse Charge Mechanism: Once a foreign supplier is VAT-registered in Mauritius, the reverse charge mechanism no longer applies for their supplies.

Penalties & Support

Failure to register, file returns, or pay VAT on time will result in penalties and interest as per the VAT Act.

Simplified Compliance Checklist for Foreign Digital Service Providers

1. Register for VAT in Mauritius

• Mandatory for all non-resident suppliers of digital services, regardless of turnover.
• Registration can be done online via the Mauritius Revenue Authority (MRA) portal.

2. Determine Customer Location

• Use at least two indicators (e.g., billing address, IP address, bank location) to confirm the customer is in Mauritius.

 3. Charge VAT

• Apply 15% VAT on all supply of digital and electronic services in Mauritius.

 4. Appoint a Local VAT Representative

• Required if annual turnover from Mauritius exceeds MUR 3 million.

 5. File VAT Returns

• Submit returns monthly or quarterly.
• Include details of taxable supplies to Mauritian customers.
• Pay VAT within 20 days after the end of the period.

 6. Maintain Records

• Keep invoices, payment details, and customer location evidence for at least 5 years.

7. Update Billing Systems

• Ensure systems can calculate and display VAT for Mauritian customers.
• Adapt pricing and invoicing processes accordingly.

Key takeaways

The introduction of VAT on digital and electronic services supplied by foreign providers marks a significant change in Mauritius’ indirect tax landscape. While the new rules are designed to promote fairness and ensure consistent taxation of services consumed in Mauritius, they introduce new registration, billing, and compliance obligations for affected suppliers. Foreign digital service providers and Mauritian customers alike should review their contractual arrangements, billing systems, and internal processes to ensure readiness for these requirements. Early action and proactive planning will be key to managing compliance efficiently, minimising risk, and avoiding penalties under the new regime.