Management services to global business entities move from zero-rated to VAT-exempt
From 1 October 2026, services supplied by Mauritius management companies to Global Business Licence holders and to qualifying trusts and foundations are exempt from VAT rather than zero-rated. The difference matters because an exempt supply carries no right to recover the VAT paid on costs.
Since 1 October 2026, services supplied by the holder of a management licence to Global Business Licence holders, and to trusts and foundations controlled from outside Mauritius, have been exempt from value added tax. The Mauritius Revenue Authority (MRA) confirmed the change in a communiqué dated 2 October 2026, headed "VAT treatment: supply of services by holder of a management licence", which attributes it to amendments made to the Value Added Tax Act by the Finance Act 2026 (Act No. 14 of 2026). The Act received assent on 12 August 2026. Up to 30 September 2026 the same services were zero-rated.
The change reaches every management company licensed by the Financial Services Commission (FSC) and, through their fees, the global business structures they administer.
What the rules say
According to the communiqué, services supplied by a management licence holder under the Financial Services Act are an exempt supply under item 97 of the First Schedule to the VAT Act where the customer is:
- a corporation holding a Global Business Licence;
- a trust whose settlor and the majority of whose beneficiaries are non-residents; or
- a foundation whose founder and the majority of whose beneficiaries are non-residents.
For supplies made before 1 October 2026, the communiqué states that any such supply of services qualifies as a zero-rated supply.
| Before 1 October 2026 | From 1 October 2026 | |
|---|---|---|
| Treatment | Zero-rated (taxable at 0 per cent) | Exempt (First Schedule, item 97) |
| VAT charged to the client | None | None |
| Input VAT on the provider's costs | Recoverable | Not recoverable to the extent attributable to the exempt supply |
The distinction comes from the VAT Act itself. An exempt supply is one specified in the First Schedule, and under section 21(2)(a) no input tax credit is allowed on goods or services used to make one. Where costs serve both taxable and exempt supplies, section 21(3)(b) allows credit in the proportion that taxable supplies bear to total turnover, and section 21(3)(d) lets the Director-General approve a different basis where that method is not fair and reasonable. A zero-rated supply, by contrast, is a taxable supply at 0 per cent, so the VAT on related costs can be recovered.
Who is affected
Management companies are affected directly. Their clients, Global Business Companies holding a Global Business Licence and qualifying trusts and foundations, see no VAT on their invoices under either treatment, but are likely to bear the cost indirectly.
The MRA's VAT FAQs (September 2025) state that a person making only exempt supplies cannot register for VAT. Most management companies make other supplies as well, and EY's alert on the Finance Act 2026 (17 September 2026) notes that registration will remain mandatory in most cases and that mixed supplies may require input tax to be apportioned.
Key dates
- 12 August 2026: Finance Act 2026 (Act No. 14 of 2026) assented.
- 30 September 2026: last day on which these services were zero-rated.
- 1 October 2026: exemption under item 97 of the First Schedule applies.
- 2 October 2026: MRA communiqué published.
What it means in practice
The standard rate of VAT in Mauritius is 15 per cent. A management company that zero-rated most of its turnover could recover all the VAT on its rent, technology, outsourced services and professional fees. It now has to apportion.
A hypothetical example shows the scale. A management company incurs Rs 10 million a year, excluding VAT, on VAT-bearing costs, and so pays Rs 1.5 million in input VAT. Before 1 October 2026, with its services zero-rated, it could recover all of it. If 90 per cent of its turnover is now exempt and 10 per cent remains taxable, the standard method allows credit for 10 per cent, or Rs 150,000, and the remaining Rs 1.35 million becomes a real cost. Salaries carry no VAT, so the size of the effect depends on how much of the cost base is VAT-bearing.
Providers will need to map their supplies by customer type and update invoicing for supplies made from 1 October 2026, then revisit their input tax calculations and the positions taken in their returns.
What we do not yet know
The communiqué leaves several questions open: how supplies straddling 1 October 2026 should be treated, beyond the statement that supplies made before that date are zero-rated; how customers outside the three categories should be treated; and whether the MRA will publish guidance on apportionment for management companies. The amended text of the First Schedule was not in the version of the Finance Act 2026 we were able to read, so this article relies on the MRA communiqué for the wording of item 97.
This piece appeared in Jurisdicta, Issue 001. General information only; not legal, tax or investment advice.