Tax Residency in Mauritius: Lessons from Dilloo and TR289 — and a Growing Contradiction

With the growing ease of working online, the determination of individual tax residency has become increasingly complex across the global landscape. In Mauritius, this complexity is further accentuated by the rising number of residents who work abroad while continuing to remit funds back home.

A series of recent decisions, notably the ARC ruling in Hilmi Mohammad Ehsan Dilloo v Director-General, MRA (2022), the related Supreme Court outcomes in 2024/2025 and the December 2025 tax ruling TR289 have reshaped the landscape. These three reference points do not merely add to the jurisprudence; taken together, they reveal a structural contradiction with tangible consequences for globally mobile professionals, premium‑visa holders and Mauritians who maintain economic ties with their home country while earning abroad.

The starting point is the ARC’s approach in Dilloo. In its 2022 decision, the ARC adopted a strict, literal interpretation of section 5(3) of the Income Tax Act (ITA), concluding that the remittance basis is a stand‑alone deeming provision. According to the ARC, foreign income becomes taxable in Mauritius whenever it is received in Mauritius or dealt with here in the interest of the taxpayer, irrespective of the individual’s residency status. In dismissing the argument that the amounts in question constituted “savings” rather than income, the ARC emphasised that the character of income does not change simply because it has been held or invested abroad before being brought into Mauritius. Under this interpretation, residency becomes largely irrelevant; what matters is whether foreign earnings enter the Mauritian tax net through remittance or use in Mauritius.

This approach remained undisturbed when the case made its way to the Supreme Court. In its 8 May 2024 judgment, the Court upheld both the taxability of the remitted funds and the ARC’s finding of residency under section 73(1)(a)(i) of the Income Tax Act 1995. Although one statutory interpretation point was allowed, the essential findings of the ARC that (i) the funds were taxable and that (ii)Mr Dilloo was resident, remained intact. When a further attempt was made to seek leave to appeal out of time, the Supreme Court rejected it on 3 September 2025, noting that the grounds advanced merely sought to challenge factual findings already made by the ARC and confirmed by the Court. The combined effect of these decisions is that the ARC’s construction of section 5(3) namely its ability to apply even without residency has not been overturned at the higher judicial level.

In contrast, Tax Ruling TR289 released by the MRA in December 2025 reflects an entirely different analytical point. The ruling concerned a Mauritian-born taxpayer (“Mrs A”) who has lived and worked in Singapore with her spouse and children, while retaining significant personal ties to Mauritius, including property ownership and a declared emotional connection to Mauritius as “home.” Despite these elements which in previous practice often weighed heavily toward residency the MRA concluded that Mrs A was not resident for tax purposes under section 73. The determining factor was her permanent place of abode: the centre of her life was in Singapore, and her day to day circumstances pointed away from Mauritius despite her domicile and property connection. The ruling suggests a more modern, internationally aligned approach to residency that recognises that domicile and sentimental ties need not dictate tax residence.

This divergence between the ARC’s remittance‑driven approach and TR289’s residency‑based threshold exposes a fundamental contradiction. If one applies the ARC’s interpretation, foreign income becomes taxable upon remittance to Mauritius even if the taxpayer is non‑resident. Yet TR289’s logic implies that non‑residents are outside the Mauritian tax net for foreign‑sourced income, regardless of remittance, unless the income is sourced in Mauritius. For practitioners, this creates two competing frameworks: one where remittance alone may trigger taxation and another where residency is the decisive gatekeeper.

The practical outcomes for taxpayers can be significant. Mauritians working abroad who remit funds may find themselves taxable in Mauritius under the “Dilloo” logic even where they are firmly established as non‑resident. Under the TR289 approach, the same individuals could be treated as non‑resident and therefore outside the charge for foreign‑source income, creating tax uncertainty.. The decisions also highlight the importance of documentation: the ARC’s treatment of foreign tax credits in Dilloo underscores the need for official proof of overseas tax paid employer attestations are insufficient under the Foreign Tax Credit Regulations 1996. Remote workers and premium‑visa entrants face similar uncertainties, particularly where their income streams, physical presence, and remittance patterns do not fit neatly into traditional residency concepts.

In light of these tensions, the most prudent way forward is to analyse cases under both section 73 and section 5(3). Taxpayers should assess residency carefully considering domicile, permanent place of abode and statutory day-count tests while also evaluating whether foreign income has been received or used in Mauritius in a way that could activate section 5(3). Foreign tax evidence must be meticulously compiled to support any FTC claims and remittances should be structured thoughtfully with awareness of how banking or spending funds in Mauritius may create a tax trigger under the remittance rule. At the same time, practitioners should watch for administrative or legislative developments, as TR289 hints at a desire by the MRA to reassert residency as the primary test, whereas the ARC and Supreme Court leave the remittance deeming provision standing on its own.

Until Parliament or the appellate courts provide clarification, Mauritius will continue to operate under this duality. This evolving jurisprudence requires a careful approach, where taxpayers and advisers prepare for the possibility that either residency or remittance may independently determine tax exposure. In an increasingly mobile world where financial flows  often diverge from physical presence, the need for coherence between section 73 and section 5(3) has never been greater.