Interesting Mauritian tax ruling on export of goods

On 23 September 2023, the Mauritius Revenue Authority (“MRA”), issued the Tax Ruling 265, highlighting the fact that it is not so easy to benefit from a reduced tax rate of 3% for the export of goods, and that in practice, the MRA does expect a certain level of activity from the exporter of goods.

• Incorporated on 17 September 2021, Company A is a domestic company focusing on fishing in Mauritian waters. It does not own any fishing vessels, nor does it have any technical and human resources to carry out fishing activities. Company A forms a strategic partnership with Company B, a company incorporated and based in Samoa.
• As part of their agreement, Company B supplies all technical, fishing vessels and human resources to Company A. Both companies are held by the same shareholder.
• To meet regulatory requirements, the Ministry of Blue Economy, Marine resources and Shipping Fisheries in Mauritius, issues an Export Authorisation and Landing Authorisation to Company B.
• Since Company B is catching the fish on behalf of Company A, the catch belongs to Company A and an invoice is issued by A to B for all sales. A debit note is received from Company B which covers the cost of fishermen and other resources supplied to Company A.
• When the catch is on-boarded, a bill of lading is issued by the shipping agent to evidence shipment by B.

The two big questions were:

1. Whether the sale of fish by Company A to Company B qualifies as an export of goods?
2. Whether Company A qualifies to pay income tax at 3%?

The MRA’s verdict was that the sale of fish by A to B does not qualify as an export of goods and therefore A is liable to be taxed at the rate of 15%.

It has not been clearly mentioned as to why the 3% tax rate was denied for the export of goods. However, our interpretation suggests that since Company A does have any technical and human resources, particularly the use of the fishing vessels which have been outsourced to Company B. This outsourcing arrangement was not necessarily the problem, but rather the issue of an Export Authorisation and Landing Authorisation by the Ministry of Blue Economy, Marine Resources and Shipping Fisheries to B.

This means that the export of goods was done in the name of B instead of A. As a result, A did not meet the requirement to be eligible for the 3% reduced tax rate for the export of goods.

For any inquiries or concerns regarding this tax ruling or other tax-related matters, we encourage you to reach out to us.