Mauritius has significantly modernised its Value Added Tax (“VAT”) regime by extending its scope to digital and/or electronic services supplied by foreign providers. The reform, introduced under the Finance Act 2025, aims to align Mauritius with global trends in taxing the digital economy at the point of consumption.
Effective 1 January 2026, foreign suppliers now must charge VAT at the standard rate of 15% on services supplied to customers in Mauritius and remit the tax to the Mauritius Revenue Authority (“MRA”).
The definition of “foreign supplier” is a person who has no permanent establishment in Mauritius or has his place of abode outside of Mauritius and supplies “digital or electronic services” to a person in Mauritius.
“Digital or electronic services” as defined under Part III of the Tenth Schedule to the VAT Act, refer to services delivered over the internet or an electronic network. These include the supply of digital content such as images, text, e-books, music, films, television programmes, and games; the provision of applications, software, and related maintenance; website-related services like web hosting and the sale of online advertising space; access to online publications such as magazines; and the remote maintenance of software and equipment.
A key aspect of the regime is the determination of whether a customer is located in Mauritius. The legislation adopts internationally recognised criteria, requiring at least two non-contradictory indicators such as billing address, IP address, country code, or payment origin to establish the place of consumption.
However, it should be noted that the treatment differs depending on whether the transaction is business-to-consumer (“B2C”) or business-to-business (“B2B”). For B2C supplies, foreign providers must charge and collect VAT directly. In contrast, where services are supplied to VAT-registered businesses in Mauritius, the reverse charge mechanism may apply, shifting the VAT obligation to the local recipient.
Compliance obligations for foreign suppliers are substantial. They must file periodic VAT returns, submit a list of taxable supplies made to Mauritian customers and remit the VAT to the MRA in the applicable foreign currency. Additionally, suppliers exceeding a prescribed turnover threshold are required to appoint a local tax representative in Mauritius.
From a policy perspective, the reform enhances tax neutrality and fairness by ensuring that both local and foreign suppliers operate under similar VAT conditions. It also broadens the tax base and increases government revenue in an increasingly digitalised economy.
In conclusion, the introduction of VAT on digital services marks a significant shift in Mauritius’ indirect tax landscape. While it imposes new compliance burdens on foreign suppliers, it reflects international best practices and reinforces the principle that consumption taxes should be levied where consumption occurs.
