A brief summary on VAT in Mauritius
Input VAT means VAT on purchases you make and Output VAT means VAT on sales you make. In Mauritius, the normal VAT rate is 15%. Registration for VAT purposes with the Mauritius Revenue Authority (“MRA”) is mandatory in some cases. These rules must be well known by entrepreneurs to avoid TAX adjustment.
Obligation or option to be VAT registered
A business (either for an individual or a company) must be VAT registered with the MRA where its taxable supplies annual turnover exceeds, or is likely to exceed, 6 000 000 Mauritian Rupees.
A taxable supply is a supply of goods, or a supply of services which are performed or utilized in Mauritius and which is subject to VAT. A taxable supply includes a supply which is zero-rated, but it does not include an exempt supply. In order to calculate the turnover of its taxable supplies, a person has to add the value of all taxable supplies it makes at all his places of business in Mauritius (including Rodrigues), including the value of the zero-rated supplies. However, it must exclude the value of capital goods disposed of and that of exempt supplies. Disbursements on behalf of customers must also be excluded.
An exempt supply is a supply of goods or services which are specifically exempted from the payment of VAT. A person who makes only exempt supplies cannot register for VAT. All goods and services specified in the First Schedule to the VAT Act are classified as exempt supply.
However a person who makes exclusively zero-rated supplies or zero- rated and exempt supplies may choose to not register although the value of the zero-rated supplies exceeds the prescribed limits. In case it makes zero-rated supplies and registers for VAT, it will be able to obtain a repayment of the input Tax suffered.
Moreover and without regard to their taxable supplies turnover, certain businesses must be VAT registered due to the nature of their activities (as listed in the tenth schedule of the VAT Act).
Anyway, a person who does not have to be VAT registered may elect to be VAT registered (which allows it to claim input tax yet increases its sales price from a customer perspective).
Once a person is registered for VAT, its registration covers all the business activities at all its places of business in Mauritius (including Rodrigues).
How to register for VAT ?
If a person is required to be registered for VAT or if it wishes to apply for voluntary registration, it must download from the MRA website the appropriate Application for Registration Form as follows:
Form VAT1- applicable to a person whose turnover exceeds the prescribed limit or who wishes to apply for voluntary registration.
Form VAT1A- applicable to a person whose turnover does not exceed the prescribed limit but who is engaged in any business or profession specified in Part I of the Tenth Schedule to the Act.
Form VAT 1B- applicable to a person engaged in any business specified in Part II of the Tenth Schedule to the Act.
The person must then fill in the form and send it with all the required information to the MRA.
Where the MRA is satisfied that the person is required to be registered or may be registered voluntarily, a Certificate of Registration will be issued to it.
Obligation to charge VAT (output tax)
Once a person is registered for VAT, it must charge VAT on all the taxable supplies made to its customers. This is its output tax.
Certain supplies are zero-rated, which means that the rate of VAT is 0%. Though, it does not mean that such supply is exempted. This concerns exports of goods and services from Mauritius, as well as certain goods and services which are supplied on the local market and classified as zero-rated as per the Fifth Schedule to the VAT Act.
VAT is also charged by the MRA on importation of goods.
VAT is chargeable on the supply of goods or services at a definite time, called the time of supply. This time of supply becomes the tax point and the supply must be accounted for by reference to that point in time.
For any supply of goods or services in Mauritius, the time of supply is deemed to be the earlier of:
the time a VAT invoice in respect of that supply is issued by the supplier; or
the time payment for that supply is received by the supplier.
Where services are supplied for a continuous period under any enactment or agreement which provides for periodic payments, the services are treated as successively supplied for the relevant parts of the period. Each successive supply is deemed to take place at the earlier of the time the supply is invoiced by the supplier or the time payment for the supply is received.
Where a taxable supply is made under a hire purchase agreement, the supply is deemed to take place at the time the agreement is made.
In the case of a lease agreement, the supply is deemed to take place at the earlier of the time the supply is invoiced by the supplier or the time payment for the supply is received.
VAT returns and recovery of VAT (input tax)
Similarly as the registered person has to charge output tax, it will be charged VAT on the taxable goods and services supplied to it by his VAT registered suppliers. This is input tax.
The registered person must then file VAT returns, pay input tax and claim output tax. A VAT registered person whose annual turnover of taxable supplies exceeds Rs 10 million has to submit monthly VAT returns.
Where the annual turnover does not exceed Rs 10 million, it has to submit quarterly returns. The quarters end on 31 March, 30 June, 30 September and 31 December. However, it may elect to submit monthly returns by irrevocable notice to the Director-General.
A taxable person may take as a credit against its output tax in any taxable period the amount of input tax allowable to it during that period.
Anyway, credit for input tax is not allowed in respect of certain goods or services listed under Section 21(2) of the VAT Act. These include:
goods or services used to make an exempt supply;
motor cars and other motor vehicles for the transport of not more than 9 persons including the driver, motorcycles and mopeds and their spare parts and accessories supplied to persons not engaged in the sale or rental of the acquired goods;
accommodation or lodging, catering services, receptions, entertainment, and the rental or lease of motor cars, motor vehicles, motorcycles and mopeds, except where the person is engaged in the supply of the same service;
petroleum oils and other oils or preparations , other than :
oils or preparation used for resale; and
gas oils for use in stationary engines, boilers and burners.
Where goods or services are used to make a taxable supply, the credit in respect of those goods or services shall be allowed in full. Where goods or services are used to make both taxable supplies and exempt supplies, the credit in respect of those goods or services shall be allowed in the proportion of the value of taxable supplies to total turnover.
No credit for input tax shall be allowed unless supported by :
VAT invoices issued by suppliers legally authorized to charge VAT; or
Customs import declarations, either electronic or otherwise, in support of the credit.
Any body or person specified in Column 1 of the Ninth Schedule of the VAT Act shall be exempted from the payment of VAT in respect of goods or services corresponding to the body or person specified in Column 2 of that Schedule. For example, importation in the limit of 1000 Mauritian Rupees per single package are exempted from VAT.
Théo Le Flohic
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