Global Daily Tax News, Mauritius Planning Various VAT Regime Changes, (Jun 12, 2025)

Mauritius announced numerous changes to the nation's value-added tax regime in its newly released 2025-26 Budget.

The Budget announces that a zero rate of VAT will be introduced for:

• fruit and vegetable purees for infants;

• canned vegetables such as tomatoes and mushrooms;

• frozen packed vegetables; and

• hairdressing services.

The VAT registration threshold will be lowered from MUR6m to MUR3m with effect from October 1, 2025. Those in receipt of a pleasure craft licence, for a vessel used for business purposes, will be required to register for VAT regardless of turnover.

In addition, during the 2025-26 financial year, electronic invoicing obligations will be introduced for suppliers with a turnover exceeding MUR80m.

VAT will be introduced on specified digital or electronic services provided by foreign suppliers from January 1, 2026.

The VAT refund scheme on the construction of a residential building or the purchase of a residential apartment or house from a property developer will be withdrawn from June 30, 2025.

VAT will no longer be collected on the import of capital goods worth MUR500,000 or more, down from MUR1m.

The VAT legislation will be amended to clarify that input tax credits will be unavailable for rented parking for motor vehicles not used in the furtherance of a business. Further, the VAT law will clarify that the reverse charge on the supply of services received from abroad will apply to all VAT registered persons, including banks receiving services from a foreign supplier.

The place of supply rules for services will be clarified to ensure VAT is collected on supplies of services to foreigners where the service is used in Mauritius.

New powers will be introduced for the tax authority to assess a taxpayer's liability when the agency is not satisfied with the adequacy or correctness of records kept, as is the case currently under the Income Tax Act. In addition, it will newly be an offence to fail to provide information or access to electronic devices at the tax agency's request, punishable by a fine and potential imprisonment.

Finally, the Budget announces an overhaul to penalty rates for non-compliance, including a doubling of the penalty for failure to issue an invoice and failing to keep adequate records, to MUR100,000.