Value Added Questions (VAT) FAQs
- How does the VAT System operate?
If a person is in business, as soon as the annual turnover of his taxable supplies exceeds the prescribed limit, he becomes a taxable person. However, if he is engaged in a business or profession specified in the Tenth Schedule to the VAT Act, 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 charged VAT on the taxable goods and services supplied to him by his VAT registered suppliers. This is his input tax.
At the end of every quarter (or every month in case his annual turnover of taxable supplies exceeds Rs 10 million), the VAT registered person has to file in a VAT return in which he substracts the input tax allowable (credit for input tax) from the output tax and pays the balance to the MRA. If the allowable 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.
- What is the meaning of 'business'?
For VAT purposes, business has a very wide meaning and includes any activity carried on by a person, whether or not for gains or profits, and which involves in part or in whole the supply of goods or services to other persons for a consideration.
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.
- When does a supply take place?
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 lease. The supply of services takes place when they are performed for a consideration.
- What is a taxable supply?
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.
- What is 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. All goods and services specified in the First Schedule to the VAT Act are classified as exempt supply.
- Which supplies are zero-rated?
A zero-rated supply is a taxable supply on which the VAT is charged at 0%. Normally, exports of goods and services from Mauritius, and certain goods and services which are supplied on the local market are classified as zero-rated as per the Fifth Schedule to the VAT Act.
- How to determine the value of taxable supplies?
If the supply is for a consideration in money, its value is the amount which, with the addition of the VAT chargeable, is equal to the consideration. (Value + VAT = consideration).
If the supply is for a consideration not consisting or not wholly consisting of money, the value of the supply shall be taken to be the open market value of the supply, that is the arm’s length value.
Where a taxable supply is not the only matter to which a consideration in money relates, the supply shall be deemed to be for such part of the consideration as is properly attributable to it.
In certain special circumstances, the Director General may determine the value of a taxable supply in a specific sector and issue a statement of practice in that respect.
The value of any taxable supply made by a taxable person shall be expressed in Mauritius currency
- On what value is VAT chargeable at importation?
At importation, VAT is charged on a value that comprises:
- the customs value of the goods;
- the customs duty and excise duty payable on the goods; and
- the various levies payable at importation.
- What is credit for input tax?
- A taxable person may take as a credit against his output tax in any taxable period, the amount of input tax allowable to him during that period.
- 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 :
- fuel oils;
- 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 authorised to charge VAT; or
- Customs import declarations, either electronic or otherwise, in support of the credit,
- Who is a taxable person?
A taxable person is a person who is registered for VAT and includes a person who is required to be registered, but has not taken the necessary steps to register.
- Which bodies/ persons are exempted from payment of VAT?
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.
- Who is required to be registered for VAT?
A person has to apply for compulsory registration in any of the following circumstances:
- If in the course or furtherance of his business he makes taxable supplies exceeds or is likely to exceed the registration threshold specified in the sixth schedule to the VAT Act.
- Irrespective of his annual turnover, if he is engaged in any of the businesses or professions listed in the Tenth Schedule to the VAT Act.
- Wholesale dealer in liquor and alcoholic produce.
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.
A person who, in addition to his employment, is engaged in any of the businesses or professions specified in the Tenth Schedule must also register for VAT.
Once a person is registered for VAT, his registration covers all the business activities at all his places of business in Mauritius (including Rodrigues).
- Can a person who is not compulsorily required to register still apply for VAT registration?
Yes. The person may apply for voluntary registration. He will be registered if he satisfies the Director-General that:
- he currently keeps and maintains a proper record of his business;
- he has been discharging his obligations under the revenue laws.
- Can a person be registered if his supplies are exempt or zero-rated?
If a person in business makes exclusively exempt supplies, he cannot be registered for VAT.
Where he makes both taxable supplies and exempt supplies and the turnover of his taxable supplies exceeds the prescribed limits or he is engaged in any of the specified businesses or professions mentioned in the Tenth Schedule, he is required to be registered for VAT.
However a person who makes exclusively zero-rated supplies or zero- rated and exempt supplies may choose not to register although the value of the zero-rated supplies exceeds the prescribed limits.
In case he makes zero-rated supplies and he registers for VAT, he will be able to obtain a repayment of the input Tax suffered.
- What are the consequences of failing to register for VAT?
Any taxable person who does not apply for compulsory registration under section 15 is still liable to pay VAT on the value of taxable supplies although he has not charged VAT to his customers. Moreover he is liable to pay to the Director-General a penalty of 5,000 rupees for every month or part of the month from the taxable period in respect of which he is liable to be registered as a registered person up to the month immediately preceding the month in which the application for registration is submitted, provided that the total penalty payable shall not exceed 50,000 rupees.
- How does a person become VAT registered?
If a person is required to be registered for VAT or if he wishes to apply for voluntary registration, he must download from 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 him.
- When is VAT chargeable on a supply?
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.
- When does a person start to charge VAT?
A person is authorized to charge VAT as from the date of registration shown on the Certificate of Registration.
- What are the obligations of a VAT registered person?
A VAT registered person has to:
- issue VAT invoices in respect of all supplies made;
- display his VAT Registration Certificate in a clearly visible place;
- keep proper records in respect of all dealing relating to his business;
- submit his VAT returns and pay tax, if any;
- submit electronically at the time of submitting his return, a list of taxable supplies made to any person, other than supplies by retail, showing the invoice number and value of supply (applicable to registered person submitting monthly return);
- produce to the Director-General, when so required, books and record for examination for the purpose of enabling him to ascertain the tax liability.
- How to determine whether one should submit VAT returns monthly or quarterly?
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. However, he may elect to submit monthly returns by irrevocable notice to the Director-General.
- What is the due date for submission of returns?
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 a registered person submits his VAT return and makes payment electronically, the time for submission of return and payment of tax is one month from the end of the taxable period.
- Can a person make a claim for repayment of the excess VAT?
Where in respect of a taxable period, a VAT return shows an excess of input tax over output tax, the VAT registered person may make a claim for repayment if he satisfies certain conditions.
- How to make a claim for repayment?
A claim for repayment may be made on the VAT return itself.
- In what circumstances can payment of VAT be deferred?
VAT may be deferred at importation in respect of capital goods, provided certain conditions are met.
- How to deregister for VAT?
VAT registered persons who longer meet the requirements to be VAT registered and who wish to be deregistered for VAT will have to submit a request for the cancellation of their VAT registration to the Director-General of the MRA.
Where the request is found to be in order, the person will be informed of the cancellation of his VAT registration by notice in writing.
In the event that MRA cancels the VAT registration, the person should:
- cease to hold himself to be a VAT registered Person as from the effective date of cancellation of the VAT registration;
- cease to issue VAT invoices as from the effective date of cancellation of the VAT registration;
- return to the MRA the certificate of VAT registration and all its copies;
- submit a return to MRA for the taxable period in which the cancellation of the registration occurs; and
- attach a statement showing the details of any adjustment at line 11 of the VAT return.
No VAT will be payable on the stock in trade and no excess VAT will be refundable.
- VAT Refund Schemes
VAT refund is available to:
- Visitors and Departing citizen of Mauritius
- Persons on construction or purchase of residential building, house or apartment
- Equipment and services to the following non VAT registered persons:
- A planter or an horticulturist
- A pig breeder
- A breeder other than pig breeder
- An apiculturist
- A fisherman
- A baker
- A tea cultivator
- A member of the Mauritius Society of Authors
FAQ's : VAT Repayment
A VAT registered person may claim repayment in respect of capital goods where the excess on his VAT return includes input tax amounting to more than Rs 100,000 on buildings, 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 of the excess amount shown in his VAT return. A person is considered as mainly engaged in making zero-rated supplies where 80% of his annual turnover is zero-rated.
A VAT registered person not mainly engaged in making zero-rated supplies, may claim, in addition to repayment in respect of capital goods as described at (2) above, repayment in respect of input tax on other goods. In this case, the repayment is limited to that part of the excess amount in respect of the goods other than capital goods, which corresponds to the proportion of the value of zero-rated supplies to the total value of taxable supplies in that taxable period.
It is to be noted that exempt supplies, when exported, are treated as zero-rated taxable supplies.
- 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 (VAT 4) and submit it together with the VAT return
The law provides that where the Director-General is satisfied with a claim for repayment, he has to effect repayment within 45 days of the date of receipt of the claim, failing which interest is payable of the prevailing bank rate.
MRA has, however, set up a fast track system for repayment, wherein the repayment may be effected in as short a delay as 7 days.
For a VAT registered person to benefit from fast track repayment, he has to comply with the following conditions:
- tax returns are submitted electronically;
- there are no outstanding tax returns;
- no tax is in arrears;
- appropriate records are kept;
- full co-operation is extended to officers at time of audit; and
- access to computerized system is facilitated.
Where it is found that a person has overclaimed an amount, a penalty representing 20 per cent of the amount overclaimed subject to a maximum limit of Rs 200,000 is charged to the taxpayer.
The penalty is payable within 28 days of the date of notification. It may also be set off against any amount of tax repayable to the VAT registered person.No claim will be made for penalty not exceeding 250 rupees.
An amount of VAT repayment is overclaimed when the VAT registered person is not entitled to the repayment either in whole or in part for whatever reason, including the following :
- Undeclared output tax;
- Credit for input tax taken in respect of goods and services used to make an exempt supply;
- Credit not taken in the correct proportion in respect of input tax suffered on taxable goods and services used to make both taxable supplies and exempt supplies;
- Credit for input tax not supported by proper VAT invoices/Customs import declarations;
- Repayment claimed in respect of input tax already used to offset output tax.
- The same input tax accounted for in more than one claim for repayment.
- Input tax for an amount of less than Rs 100,000 in respect of capital expenditure claimed by VAT registered persons not mainly engaged in making zero-rated supplies.
- Credit claimed in respect of motor cars and other motor vehicles for the transport of not more than nine persons and the maintenance and repairs of the vehicles;
- Gas oils and mogas;
- Accommodation and lodging
- How is repayment effected?
Repayment is effected through bank transfer. The claimant has to submit to MRA details of the bank account to which the repayment is to be credited.