Mauritius has finally explained how the top-up tax works, and the first returns are due on 7 September 2026

Mauritius introduced its Qualified Domestic Minimum Top-up Tax (“QDMTT”) in the Finance Act 2025, with effect from the year of assessment commencing 1 July 2025. It did not, at that point, explain how to calculate it. A year later, the Income Tax (Qualified Domestic Minimum Top-up Tax) Regulations 2026 came out in Government Gazette No. 57 of 8 August 2026. They are deemed to have come into operation on 1 July 2025.

Two further instruments were also published within ten days of the gazette, and both change the impact. The Finance Act 2026 was assented on 12 August 2026 and amended four of the charging sections, most of them retrospectively to the first year of the charge. The Mauritius Revenue Authority (“MRA”) then issued a communiqué on 18 August 2026 fixing the first filing date. So all three should be considered together.

When we first wrote about QDMTT after the Finance Act 2025, we highlighted the key unknowns: the carve-out percentages, what counted as eligible payroll and eligible tangible assets, whether Mauritius would take the country-by-country safe harbour, how the partial exemption would interact with the new charge, and the compliance mechanics. This article answers those from the gazetted text as amended and raises several questions the alerts did not.

Before we get into what they say, it is worth being clear about what this tax is actually for, because the acronyms around QDMTT are a real head-scratcher.

What a QDMTT is trying to do

Under the OECD’s Pillar Two rules, very large multinational groups must pay at least 15% tax on their profits in every country in which they operate. In Mauritius the size test is in section 50Q of the Income Tax Act (“ITA”): the group needs consolidated revenue of EUR 750 million or more in at least two of the four fiscal years before the year in question. If a group’s effective tax rate in a particular country falls below 15%, someone collects the difference. That difference is called a top-up tax.

The question is who collects it. If Mauritius does nothing, the top-up on Mauritian profits is collected by the country where the group’s parent sits or failing that by other countries in the group under a backstop rule. The money leaves the island and so Mauritius has implemented its own defensive top-up rules, whereby it will charge any shortfall that would be otherwise taxed in the parent country. 

This is what the Qualified Domestic Minimum Top-up Tax does. It allows Mauritius to charge the same 15% shortfall itself, first, so that nothing is left for anyone else to take. For the group, the total tax bill is broadly unchanged: it was always going to pay 15% somewhere. What changes is the recipient. For Mauritius, it is the difference between collecting the tax or having it charged elsewhere in respect of Mauritian profits.

Two things follow from this, and they explain most of what the regulations do. First, the calculation has to look like the OECD’s calculation, or other countries will not accept it and will charge their own top-up anyway;, this is the “qualified” part. Second, none of this touches companies below the size threshold, so if your group is not a EUR 750 million group, this article is not about you.

On the first point, Mauritius has gone further than most other countries. Regulation 2 names eleven OECD documents, running from the December 2022 safe harbours paper through to the Side-by-Side Package of 5 January 2026, with a twelfth limb allowing later guidance to be added by amendment. Regulation 2(2) then requires that consideration be given to OECD guidance generally, and to those documents in particular, in applying the regulations. Hard-wiring the commentary into the domestic instrument, rather than leaving it to interpretation, is a deliberate bid for qualified status and for the QDMTT safe harbour in parent jurisdictions. It is not a guarantee of that status, and groups should watch the peer review outcome rather than assume it, i.e. to ensure the Mauritius top-up tax “switches off” the top-up rules at Parent country level.

Firstly, the deadline

The regulations were not a postponement. The Mauritius top-up charge has been running since 1 July 2025 and the regulations are backdated to that date. What was suspended was the filing, not the liability, which means we need to worry about this sooner than we’d hoped.

The MRA’s position, stated consistently in its communiqués since October 2025, is that the charge picks up Mauritian entities whose ultimate parent has a fiscal year ending on or after 1 January 2025. A 31 December 2024 parent year end is therefore outside the remit, and a 31 January 2025 or 31 March 2025 parent year end is inside it. The ITA does not say this very clearly. Section 50R(3) charges the tax for the year of assessment commencing 1 July 2025, and a parent year ending in January or March 2025 closes before that year begins. In practice everyone will file on the MRA’s timetable, but the start date is an administrative position rather than one the ITA compels.

Section 50W(3) requires the designated person to file the return and pay the tax within 15 months of the end of the fiscal year. The Finance Act 2026 amended that subsection so the 15 months now runs from the end of the month in which the fiscal year ends, with effect from the year of assessment commencing 1 July 2025, which gives a little extra time to any group whose parent has a mid-month year end. “Fiscal year” is defined in section 50P as the accounting period for which the ultimate parent prepares its consolidated financial statements, so the clock runs from the parent’s year end, not the Mauritian entity’s. That catches people out where the two year-end dates differ and should be considered carefully.

We also note what is absent. The OECD’s transitional 18-month deadline is for the GloBE information return, and Mauritius has given nothing equivalent for its domestic return. The first QDMTT return is due on the ordinary 15-month timetable. Section 50X then adds a penalty on tax unpaid by the due date, reduced by the Finance Act 2026 from 5% to 2.5% with effect from 12 August 2026, plus interest at 0.25% per month. Note too that under section 50W(6) all covered persons are jointly and severally liable for the tax, so appointing a designated person allocates the filing, not the exposure. The Finance Act 2026 also extended the window for amending a QDMTT return under section 50Y from two years to three.

For the earliest affected groups the original timetable ran out some time ago, and the MRA has extended it twice. It first moved the date to 30 June 2026 for returns falling due between 1 April and 29 June 2026, which we covered at the time in Mauritius extends DMTT filing deadline. It then moved it again, on 13 July 2026, to one month after promulgation of these regulations.

The communiqué of 18 August 2026 now settles it. The MRA confirms that the regulations were proclaimed on 8 August 2026 and that:

• Groups whose ultimate parent has a fiscal year ending between 1 January 2025 and 31 May 2025 must file and pay on or before 7 September 2026;
• Groups with a later fiscal year end revert to the ordinary 15-month rule;
• Penalties and interest will not apply where the return is filed and the tax paid by that date; and
• The electronic filing facility is now live on the MRA website.

So nothing is yet late, but for the first cohort the remaining window is under three weeks!

The substance carve-out, and what it does in practice

The regulations do not tax all of a Mauritian entity’s profit. They first strip out an amount meant to represent a routine return on real activity: people and physical assets. This is the substance-based income exclusion, and it works as a deduction from profit before the top-up is applied, not as a credit against tax.

The calculation is a percentage of two things: eligible payroll costs for employees working in Mauritius, and the carrying value of eligible tangible assets located in Mauritius. Regulation 16 uses the OECD transitional percentages, which taper each year as follows:

From 2033 the rate settles at 5% for both.

Let’s unpack this by way of an example: Take a Mauritian manufacturing subsidiary, the group’s only entity on the island, exporting all of its output and so taxed at 3% under section 44B rather than at the headline rate of 15%. That regime, not the partial exemption, is what puts most Mauritian manufacturers in the frame. Assume a fiscal year beginning in 2025, GloBE income of USD 800,000, eligible payroll of USD 2 million, eligible tangible assets with an average carrying value of USD 5 million across the year, and an effective rate that tracks the 3% statutory rate. Its carve-out is 9.6% of payroll, being USD 192,000, plus 7.6% of assets, being USD 380,000: USD 572,000 in total. Only the remaining USD 228,000 is exposed to top-up tax. The top-up percentage is 12% and the tax is around USD 27,000, rather than the USD 96,000 it would face with no carve-out. Where a group has several Mauritian entities, the exclusion and the effective tax rate are worked out for all of them together, not one by one.

The figures are easy to take from the wrong place. In our view, the asset number is the average of the opening and closing carrying value net of depreciation, as recorded for the parent’s consolidated accounts, not the closing balance sheet figure. And payroll capitalised into the carrying value of those assets is already counted on the asset side, so it has to come out of the payroll side. So a manufacturer cannot take 9.6% of total payroll and 7.6% of gross plant.

Thus, for a company with genuine staff and genuine assets on the island, the carve-out does real work, and in many cases it will remove most or all of the exposure. A business with a large workforce and a modest margin may find its carve-out exceeds its profit entirely, in which case there is no top-up at all.

It does nothing at the other end of the scale. For a holding or investment vehicle with little payroll and no qualifying assets, there is almost no carve-out to take. Two exclusions matter here. Property held for sale, lease or investment does not count as an eligible tangible asset, so an entity whose principal asset is investment property gets no asset relief however large the balance sheet. And regulation 16(1) denies the carve-out to investment entities altogether.

There is a third issue to consider. The definition of eligible tangible assets should pick up a lessee’s right of use over tangible assets, and as gazetted it says intangible. Anyone whose Mauritian plant or premises are leased rather than owned should read the note on the drafting below before assuming those assets are in the carve-out.

That second point sits awkwardly with the ITA. Section 50V(6) says that the substance-based income exclusion for an investment entity shall include eligible payroll and tangible assets, adjusted proportionately for the group’s ownership share, and sections 50V(4) and (5) both proceed on the basis that an exclusion has been determined for each investment entity. Regulation 16(1) takes it away. Section 50U(3) does leave the amount of the exclusion to be prescribed, so there is an argument that the regulation governs, but an investment entity with real payroll and real assets in Mauritius has a point worth taking and should not simply concede it.

The carve-out rewards operating substance but it does nothing for holding activities and this should be carefully considered.

The safe harbour that may make all of this go away, for now

This was the largest open question and the answer is yes: Mauritius has adopted the transitional CbCR safe harbour in full. Under regulation 26, the top-up tax is deemed nil for the transition period if any one of three tests is met on the group’s qualified country-by-country report:

• Revenue below EUR 10 million and profit before tax below EUR 1 million
• A simplified effective tax rate at or above the transition rate, being 15% for 2023 and 2024, 16% for 2025 and 17% for 2026
• Profit before tax at or below the substance-based income exclusion amount

The transition period covers fiscal years beginning on or before 31 December 2026, and excludes any year ending after 30 June 2028. Once out, always out: a group that did not apply the safe harbour in an earlier year in which it was within the charge cannot pick it up later, unless it had no Mauritius members that year.

For the many Mauritius operations that are incidental to a much larger group, the simplified rate test will settle the matter without any full computation. That is a real saving, but it only lasts two or three years, not forever.

Separately and permanently, regulation 18 allows an annual election for nil tax where average revenue over three years is below EUR 10 million and average income is a loss or below EUR 1 million. Stateless entities and investment entities are excluded from that calculation.

Funds actually need to worry

Various Mauritius country summaries still say that investment funds and real estate investment vehicles are excluded from the QDMTT. Regulation 3(4) seems to say something narrower, and the Finance Act 2026 has since written the same limit into section 50P itself. An investment fund or real estate investment vehicle is an excluded person only where it is the ultimate parent entity of the group. This is important as it impacts funds and real estate vehicles, and leaves pension funds where the ITA put them.

A Mauritian fund sitting mid-structure beneath a corporate or institutional parent is therefore in scope. It is also an investment entity, because section 50P defines that term to include an investment fund, so section 50V(2) makes it compute its effective tax rate separately, regulation 16(1) purports to deny it the substance carve-out, and regulation 18(4) shuts it out of the permanent de minimis election. There are two routes out. The tax transparency election in regulation 19 needs the owner to be both taxed at 15% or more and subject to a mark-to-market or similar regime on the annual change in fair value of its interest. The taxable distribution method in regulation 24 needs the owner to be reasonably expected to pay 15% or more on distributions. Neither will describe many investors in Mauritius funds, and the mark-to-market condition makes the first route narrower than it first looks.

So if you were assuming your fund is outside the regime, you may need to think again.

Captives and cell companies: better and worse than it looks

We start with an oddity most commentary has missed. Section 50P of the ITA lists an insurance investment entity as an excluded person, alongside pension funds, investment funds and real estate investment vehicles. Regulation 3(4) then narrows the exclusion to ultimate parent entities, but only for investment funds and real estate investment vehicles. It says nothing about insurance investment entities.

The Finance Act 2026 then wrote regulation 3(4) into the ITA itself. The Bill was before the National Assembly while the regulations were being made, it passed on 31 July 2026 and it was assented on 12 August, four days after the QDMTT regulations were gazetted. It repealed paragraph (e) of the excluded person definition and replaced it with “an investment fund where it is an ultimate parent entity” and did the same to paragraph (g) for real estate investment vehicles, in both cases with retrospective effect to the year of assessment commencing 1 July 2025. Paragraph (f), the insurance investment entity, was left exactly as it was. So the legislature opened this list, narrowed two of its limbs by reference to ultimate parent status, and did not touch the third. Read as enacted, an insurance investment entity appears to be an excluded person wherever it sits in the group.

There is one provision the other way. Regulation 26(4)(c) says that an investment entity includes an insurance investment entity, which would be unnecessary if such an entity were excluded from the charge altogether. But that provision is expressed to apply for the purpose of regulation 26(4)(a)(i) and (ii) alone, it goes to the transitional country-by-country safe harbour, and a regulation confined to its own paragraph cannot cut down an excluded person definition in the ITA. Under the OECD Model Rules an insurance investment entity is an investment entity rather than an excluded entity, so Mauritius is out of step, and given the weight it is placing on qualified status the position may not survive peer review. It is a point worth taking now rather than conceding.

It helps fewer captives than it first appears in any event. The only definition of the term in either instrument is in regulation 26(7), expressed to apply in that regulation alone, and it describes a vehicle that would be an investment fund or real estate investment vehicle but for being established in relation to liabilities under an insurance or annuity contract and wholly owned by an entity regulated as an insurance company. That describes an insurer’s asset-holding vehicle. It does not describe a captive underwriting its parent’s risk, and the ownership condition will not fit a captive held by a trading parent. Section 50P creates a class of excluded person and nowhere says what it is.

So for most captives the answer is the unhelpful one. There is no captive carve-out. Regulation 4(5) takes amounts charged to policyholders for taxes on policyholder returns out of GloBE income and brings in returns to policyholders not otherwise recognised, and that is the extent of the accommodation. The substance-based income exclusion will rarely assist a vehicle whose activity is underwriting rather than employing people or operating assets.

The Finance Act 2026 has made that worse in the same breath. Item 28 of Sub-part C of Part II of the Second Schedule exempts the income of a person licensed under the Captive Insurance Act 2015 for up to 10 years from the income year in which it starts operating, and the Finance Act 2026 adds a further period of up to 5 years for any captive licensed before 19 June 2026. A captive sitting on that exemption pays no Mauritian tax and so contributes nothing to the combined effective rate, which is struck across all covered persons on the island together. Where the captive is the group’s only Mauritian entity, the top-up is the whole 15% of what the carve-out does not remove, and the carve-out will remove very little. Mauritius has extended the relief and, for groups above the threshold, arranged to take it back under Sub-part AF.

Then the question neither instrument answers. Where the captive is written through a protected cell company, is the covered person the cell or the company? A PCC is a single legal person, but each cell has its own segregated assets, liabilities and accounts, and cells are conventionally taxed on their own income. The two readings give different answers on effective tax rate blending, on the de minimis tests and on who the designated person is. Government Notice No. 135 does not mention cells at all, the MRA’s guidance note runs to two pages on the notification process, and we are not aware of any published guidance that resolves the point.

Anyone running a cell captive out of Mauritius should form a documented view on this now rather than discover it at filing.

Three more things in the gazette

International shipping is out, on a condition. Regulation 17 excludes international shipping income and qualified ancillary shipping income from the computation altogether, but only where the covered person can satisfy the Director-General that the strategic or commercial management of all the ships generating that income is effectively conducted from within Mauritius. Ancillary income is capped at 50% of shipping income. Related payroll and assets come out of the substance carve-out to match. For groups using Mauritius as a shipping base this is the most valuable provision in the instrument, and it turns on a management test that has to be evidenced.

Transfer pricing is now inside the top-up calculation. Regulation 4(2) requires a transaction between a covered person and certain counterparties, including a member not resident in Mauritius, a minority-owned covered person, and a joint venture or joint venture subsidiary, to be adjusted to arm’s length under section 75 of the Act ITA where it is not recorded at the same amount by both parties or is not consistent with the arm’s length principle. A transfer pricing exposure is no longer only a transfer pricing exposure: it feeds the GloBE income figure directly.

Property gains have their own election. Regulation 11 lets the designated person carry an aggregate gain on Mauritian immovable property back against net asset losses over a five-year look-back, spreading any remainder evenly across those years and recalculating the effective tax rate. It is annual, and it is the one place the regulations do something useful for property, which otherwise gets no tangible asset carve-out at all.

Dividends and the partial exemption

The regulations do not disapply the 80% partial exemption, and neither does the Finance Act 2026. Where it pulls the Mauritius effective rate below 15%, the shortfall is collected as top-up tax. That much was always understood.

What the regulations settle is dividends, and the answer is better than the earlier drafting suggested. Commentary published earlier in 2026 warned that a dividend might be dragged into the calculation even on a non-portfolio shareholding. Regulation 4(1)(b) now adjusts financial accounting net income for excluded dividends, and regulation 13(3)(a) reduces covered taxes by the current tax expense on income excluded under regulation 4. Both sides leave the effective rate calculation, which is the correct result.

The definition carves out only two categories from excluded dividends: short-term portfolio shareholdings, being interests carrying rights to less than 10% of profits, capital, reserves or voting rights and economically held for less than a year at the date of the distribution, and interests in an investment entity subject to a section 50V(7) election. Everything else received or accrued on an ownership interest is excluded.

The phrase “ownership interest” is key here. It means an equity interest carrying rights to profits, capital or reserves. A return on something debt-like or hybrid in substance is not a dividend on an ownership interest and never reaches the exclusion. That, together with short-term portfolio dividends, foreign-source interest and foreign permanent establishment income, is where partial exemption exposure genuinely sits. The review to be done is a targeted one, not a wholesale repricing of every partial exemption claim.

A note on the drafting

One issue sits in the definition the whole asset carve-out rests on. Regulation 2 defines eligible tangible assets to include, at paragraph (c), “a lessee’s right of use of intangible assets located in Mauritius”, and at paragraph (d) a government licence for the use of immovable property or the exploitation of natural resources “which entails significant investment in intangible assets”. Article 5.3.4 of the OECD Model Rules says tangible in both places. Read literally, the Mauritian text admits rights over intangibles to a tangible asset carve-out and shuts out the lessee’s right of use over tangible assets that the carve-out was written for. A group whose Mauritian factory or plant is leased rather than owned should raise the point rather than assume the sensible reading, because the sensible reading is not the one on the page.

Two internal cross-references are also misdirected. Regulation 14(4) points to “regulation 6(4) and (5)”, but regulation 6 runs from (a) to (e) and the sense requires regulation 5(4) and (5), which is the permanent establishment loss provision. Regulation 14(2)(b) cites “regulation 6(1)(c)” where the reference must be to regulation 6(c), as regulation 16(5)(c)(i) has it. Neither changes the outcome, but anyone relying on the allocation rules in regulation 14 should document the reading they have applied.

The shipping exclusion appears to be a more substantive mismatch. Section 50S(2) is unconditional on its face and leaves only the meaning of the income to be prescribed, while regulation 17(1) adds a requirement that the strategic or commercial management of all the ships be effectively conducted from within Mauritius. A regulation made under a power to prescribe the meaning of income has been used to attach a management test the Act does not contain.

A separate issue has already been corrected. The definition of “covered person” in section 50P referred to a member “to whom section 50P applies”, where the provision that applies to persons is section 50Q, and the Finance Act 2026 substituted the correct reference with effect from the first year of the charge. That correction is the useful signal here. The regulations were gazetted on 8 August 2026, the Finance Act was assented on 12 August, and the MRA fixed the first filing date on 18 August. Three instruments in eleven days, each amending or resolving the one before it. We set out the Finance Bill’s wider measures in Mauritius Finance Bill 2026: an overview of the key measures. Anyone still reading Government Notice No. 135 against an unamended Income Tax Act is now wrong on the penalty rate, on the filing clock and on the amendment window.

What to do now

1. Establish your filing date. If your ultimate parent’s fiscal year ended between 1 January and 31 May 2025, it is 7 September 2026 and there are under three weeks left. Otherwise, it is 15 months from the end of the month in which the parent’s fiscal year ends.
2. Test the transitional safe harbour first. If the simplified rate or routine profits test is met, the full computation falls away for the transition years.
3. If it is not met, model the substance carve-out on the actual transitional percentages, using average rather than closing carrying values, and check whether your tangible assets are excluded as held for sale, lease or investment. If the assets are leased in, take a view on the intangible drafting point before you rely on them.
4. Review intragroup funding into Mauritius. Where the combined Mauritius effective rate is below 15%, regulation 4(4) strips out expense on an arrangement with a high-tax group counterparty that increases deductions without a matching increase in that counterparty’s taxable income.
5. For fund structures, establish whether the Mauritian vehicle is the ultimate parent. If it is not, it is in scope, and the excluded person analysis will not save it.
6. If you run a captive, test whether it is an insurance investment entity and therefore an excluded person, before assuming it is in scope. Check separately whether the Finance Act’s five-year extension of the Captive Insurance Act exemption applies to you, because a nil Mauritian rate is what creates the top-up. If the captive is written through a cell company, decide whether you are filing at cell or company level and record the basis.
7. Confirm the designated person has been notified to the MRA. The regulations end a year of uncertainty, and they confirm the direction of travel. Mauritius has aligned with the OECD rather than defended its rate advantage, and the weight of that choice falls on holding and investment structures rather than on operating businesses. For groups with real people and real assets on the island, the substance carve-out does real work. For those without, the arithmetic has changed.

If you would like to discuss how the QDMTT Regulations 2026 affect your group, please contact.

This article is general commentary on Government Notice No. 135 of 2026, the Finance Act 2026 and the MRA communiqué of 18 August 2026. It does not constitute advice. It reflects our understanding of the position as at 21 August 2026.