Mauritius will become one of many countries this year to introduce 15% VAT on digital services provided by non-resident companies to consumers based in Mauritius.
In its 2020-21 budget, the Mauritian government proposed its plan to extend the scope of VAT to digital and electronic services provided by foreign companies to local Mauritians.
The budget stated:
“Where a foreign supplier (i.e. a person who has no permanent establishment in Mauritius and has his place of abode outside Mauritius) supplies, in the course of his business, digital or electronic services (i.e. over the internet or an electronic network which is reliant on the internet or services dependent on information technology) to a person in Mauritius, VAT shall be applicable on such supplies in accordance with existing VAT rules.”
An effective date will be announced once the act is finalised. Clarity is still needed on what types of digital services need to be taxed.
CEO of Vatglobal Gareth Kobrin has been watching global governments’ uptakes of VAT on digital services closely and says governments are looking for a way to inject revenue into their countries due to the pandemic.
“VAT on digital services for non-resident companies was an inevitable global movement but the pandemic has fast-tracked decision making within many governments because they desperately need the revenue.”
Kobrin says the pressure is on providers of digital or electronic services across the globe to keep a close watch of their international compliance.
“It’s never been more important for businesses offering digital services to make sure they’re compliant and correctly VAT registered where they need to be. It’s not just your own tax man you need to worry about. There are many who are going to come calling and businesses need to be prepared if they want to avoid penalties.”