Mauritius VAT on Digital Services from Foreign Suppliers: Budget 2025-26 Updates

On June 5, 2025, the Mauritian government released a National Budget 2025-26 entitled “From Abyss to Prosperity: Rebuilding the bridge to the future.” To achieve its ambitious goals of promoting an export-oriented reindustrialisation strategy, enhancing economic diplomacy, developing emerging economic sectors, and establishing a balanced fiscal framework, the government announced several tax measures, including VAT and excise duty.

Key VAT and Excise Measures

One of the first budget measures announced is to remove VAT for specific infant foods, canned and frozen packed vegetables, CCTV systems, and hairdressing services. Additionally, the government increased excise duties on alcoholic and tobacco products by 10%, effective June 6, 2025. Furthermore, the excise duty on sugar content in sugar-sweetened products increased from 6 cents to 12 cents per gram on the same date.

Under the National Budget, the mandatory VAT registration threshold lowered from MUR 6 million (approximately USD 132,000) to MUR 3 million (approximately USD 66,000), representing a 50% decrease. The new rule for mandatory VAT registration comes into effect on October 1, 2025.

Following the OECD recommendations, the Mauritian government plans to introduce a 15% Qualified Domestic Minimum Top-Up Tax applicable to resident parent companies or subsidiaries of large multinational enterprises. One of the most significant announcements is that starting from January 1, 2026, specified digital or electronic services provided by foreign suppliers will become subject to VAT.

As part of the plans to increase VAT compliance and ensure more revenues, the government will progressively extend the e-invoicing system to include suppliers with an annual turnover exceeding MUR 80 million (approximately USD 1.75 million), thereby broadening the scope of real-time invoice reporting to include a larger number of large businesses.

Conclusion

Considering the scope and announced measures outlined in the National Budget 2025-26, it is apparent that the Mauritian government aims to complete the implementation of VAT on digital and electronic services, originally introduced through the Finance Act 2020. 

However, some additional guidance and clarifications are expected to be published in the upcoming months, especially regarding the Qualified Domestic Minimum Top-Up Tax and VAT on digital services for foreign taxable persons.

Source: KPMG, Bloomberg