Mauritius to extend VAT rules to foreign-supplied digital services

The Mauritius Government has revealed a plan to extend the scope of its VAT system to digital and electronic services provided by non-resident businesses to customers based in Mauritius.

Non-resident digital businesses currently do not have to apply VAT to their sales to customers based in Mauritius. This is the loophole the government in Mauritius is attempting to close with the proposed new rules. A non-resident business is defined as one that has no permanent establishment in Mauritius and supplies digital and electronic services to customers based in Mauritius.

Mauritius VAT reform

In its recent 2020-21 budget Mauritius announced that VAT – at 15% – will be introduced on digital and electronic services provided through the Internet by non-residents to customers based in Mauritius. There is no confirmed introduction date at the moment. The effective date will be revealed when the country’s Finance Act is finalised.

While digital and electronic services are specifically within the scope of these new VAT rules, information technology and related materials and equipment for online education (pending approval from the Mauritius Higher Education Committee) will be exempt from VAT. As a result there may be some additional work involved in determining whether a specific digital and electronic service is within the scope of the proposed new rules. 

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