FAQs - Value Added Tax
- What is Value Added Tax?
- How does the VAT System operate?
- What is the meaning of 'business' ?
- When does a supply take place?
- What is a taxable supply?
- What is an exempt supply?
- Who is a taxable person?
- Which supplies are zero-rated?
- When is VAT chargeable on a supply?
- Who is required to be registered for VAT?
- How is the turnover of taxable supplies calculated?
- How does a person become VAT registered?
- What about VAT returns?
- When does a person start to charge to VAT?
- How to determine whether one should submit returns monthly or quarterly?
- What is the due date for submission of returns?
- Who is eligible for repayment?
- How to make a claim for a repayment?
- How do VAT Registered persons in Rodrigues operate VAT?
Value Added Tax (VAT) is a tax on goods and services. It is chargeable on all taxable supplies of goods and services made in Mauritius by a taxable person in the course or furtherance of any business carried on by him. VAT is also payable on the importation of goods into Mauritius, irrespective of whether the importer is a taxable person or not. The rate of VAT is 15 per cent.
If a person is in business, as soon as the turnover of his taxable supplies exceeds the prescribed limit, he becomes a taxable person. However, if he is engaged in a specified business or profession, he is a taxable person irrespective of the turnover of his taxable supplies.
As a taxable person, he is required to be registered for VAT.
Once a person is registered for VAT, he charges VAT on all the taxable supplies made to his customers. This is his output tax. Similarly, the VAT registered person will be claimed VAT on the taxable goods and services supplied to him by his VAT registered suppliers. This is his input tax.
Every quarter (or every month in case his annual turnover of taxable supplies exceeds Rs 12 million) the VAT registered person fills in a VAT return in which he substracts the input tax allowable from the output tax and pays the balance to the MRA. If the input tax is more than the output tax, the excess may be carried forward as a credit to his next return or may be repaid in certain circumstances.
For VAT purposes, business has a very wide meaning and includes activities carried on by a person, whether or not for gains or profits.
As a general rule, business in the context of VAT means the carrying on of any trade, commerce or manufacture, profession, vocation or occupation and includes the provision of facilities by clubs, associations or other organisations which charge admission fees.
A supply of goods takes place when they are transferred generally for a consideration in money or money's worth. Goods may be supplied on sale, including credit sale, on hire purchase or on rental. Services are supplied when they are performed for a consideration.
A taxable supply is a supply of goods, or a supply of services which are performed or utilised, 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.
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.
A taxable person is a person who is registered for VAT or a person who is required to be registered, but has not taken the necessary steps to register.
In general, all goods or services which are exported are zero-rated. In addition, certain goods and services which are supplied on the local market are zero-rated.
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 an invoice or a VAT invoice in respect of that supply is issued by the supplier: or
- the time payment for that supply is received by him.
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.
A person has to apply for compulsory registration in any of the following circumstances :
(a) If in the course or furtherance of his business he makes taxable supplies and the turnover of the taxable supplies exceeds or is likely to exceed Rs 2,000,000
(b) His turnover does not exceed the specified limit, but he is engaged in any of the businesses and professions mentioned below :
- Accountant and/or auditor
- Advertising agent
- Adviser including investment adviser and tax adviser
- Architect and/or draughtsman
- Attorney and/or solicitor
- Barrister having more than 2 years standing at the Bar
- Clearing and forwarding agent under the Customs Act
- Consultant including legal consultant, tax consultant, management consultant and management company other than a holder of a management license under the Financial Services Development Act 2001
- Customs house broker under Customs Act
- Estate agent
- Land surveyor
- Marine surveyor
- Motor surveyor
- Project manager
- Property valuer
- Quantity surveyor
- Sworn auctioneer
- General sales agent of airlines
- Dealers registered with the Assay Office under the Jewellery Act
(c) He is engaged in any of the businesses specified below, irrespective of the turnover of his taxable supplies :
- Banking by a company holding a Banking Licence under the Banking Act in respect of its banking transactions other than with non residents and corporations holding a Global Business Licence under the FSD Act 2001.
- (i) Insurance agent under the Insurance Act except the business in respect of contracts of life insurance entered into prior to 10 January 2003
(ii) Insurance broker under the Insurance Act except the business in respect of contracts of life insurance entered into prior to 1 October 2003.
- Management services by a holder of a management licence under the Financial Services Development Act 2001 in respect of services supplied other than those supplied to corporations holding a Category 1 Global Business Licence or a Category 2 Global Business Licence under the Act.
- Services in respect of credit cards issued by companies other than banks to merchants accepting such credit cards as payment for the supply of goods.
A person who, in addition to his employment, is engaged in any of the businesses or professions specified in (b) or (c) above must also register for VAT.
Once a person is registered for VAT, his registration will cover all the business activities at all his places of business in Mauritius (including Rodrigues).
In order to calculate the turnover of his taxable supplies, a person has to add the value of all taxable supplies he makes at all his places of business in Mauritius (including Rodrigues), including the value of the zero-rated supplies. However, he should exclude the value of capital goods disposed of and that of exempt supplies. Disbursements on behalf of customers should also be excluded.
If a person is required to be registered for VAT or if he wishes to apply for voluntary registration, he must obtain from the VAT Department 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 him.
A person is authorized to charge VAT as from the date of registration shown on the Certificate of Registration.
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, he has to submit quarterly returns. The quarters end on 31 March, 30 June, 30 September and 31 December.
FA 2006 - Where the annual turnover of taxable supplies does not exceed Rs 10 million, a registered person may irrevocably elect the taxable period to be a period of a month.
A return has to be submitted within 20 days from the end of the month or quarter to which it relates.
Where the last day for the submission of a VAT return falls on a Saturday, Sunday or public holiday, the VAT return may be submitted on the following day that is not a Saturday, Sunday or public holiday.
The return has to reach the MRA by the due date. Where the return is sent by post, the date of the postmark is not considered as the date on which the return is submitted.
Where a registered person submits his VAT return and make payment electronically, the time for submission of return and payment of tax is one month.
A VAT registered person is eligible for repayment if :
- he is engaged in making zero-rated supplies; or
- the excess amount shown in his return includes allowable input tax amounting to more than Rs 100,000 in respect of capital goods being building or structure, plant, machinery or equipment of a capital nature.
Where a VAT- registered person is mainly engaged in making zero-rated supplies, he may claim the whole or part of the excess amount.
- VAT registered persons filing electronic returns are allowed to make the claim on the VAT return itself.
- Other VAT registered persons have to make the claim on the prescribed form (VAT4) and submit it together with the VAT return.
VAT Registered persons in Rodrigues should pay their tax into the bank account in the name of the Director General, MRA with the State Bank of Mauritius Ltd in Port Mathurin, Rodrigues. The original of the paying-in slip has to be forwarded to the MRA together with the return (VAT3). An advance copy of the return and the paying-in slip should be sent by fax on or before the due date.