African tax jurisprudence continues to evolve at pace, with two recent appellate decisions from Mauritius and Tanzania providing important guidance on how courts are approaching the interpretation of tax legislation.
Although the cases concern different areas of tax law, one involving Mauritius’ partial exemption regime and the other transfer pricing in Tanzania, both reinforce a common theme: courts are increasingly looking beyond technical arguments and placing greater emphasis on the substance of transactions, legislative purpose and evidential support.
For taxpayers operating across Africa, these judgments offer valuable insight into how future disputes may be approached by both tax authorities and the courts.
Mauritius: Privy Council Clarifies the 80% Partial Exemption on Interest Income
In a landmark decision handed down on 30 June 2026, the Judicial Committee of the Privy Council dismissed the Mauritius Revenue Authority’s appeal in Director General, Mauritius Revenue Authority v Alteo Energy Ltd, confirming that Alteo was entitled to claim the 80% partial exemption on interest income.
The dispute centred on whether a company could only benefit from the exemption if earning interest formed part of its core business activities.
The Mauritius Revenue Authority argued that because Alteo’s principal business was electricity generation rather than financing or lending, it did not satisfy the Core Income Generating Activities (CIGA) requirement.
The Privy Council disagreed.
Instead, it confirmed that the legislation does not require interest income to arise from the company’s principal business activity. Rather, the relevant question is whether the core activities necessary to generate that interest income are carried out in Mauritius.
The judgment aligns closely with the OECD’s BEPS Action 5 substantial activity principles, confirming that the focus should be on whether genuine economic substance exists in relation to the income concerned, rather than on the overall nature of the taxpayer’s business.
The decision is particularly significant because many domestic Mauritian companies had either been denied the exemption or chose not to claim it while awaiting judicial clarity. According to commentary following the judgment, approximately 140 cases had been held in abeyance pending the outcome.
For businesses operating in Mauritius, the ruling provides welcome certainty regarding the interpretation of the partial exemption regime and reinforces the importance of demonstrating real substance within the jurisdiction.
Tanzania: Court of Appeal Upholds Transfer Pricing Adjustment
A separate but equally significant decision has emerged from Tanzania.
In Amadeus Global Travel Distribution Limited v Commissioner General, Tanzania Revenue Authority, the Court of Appeal dismissed the taxpayer’s appeal concerning the treatment of finance costs under the Transactional Net Margin Method (TNMM).
The dispute focused on whether finance costs should be excluded when calculating an operating margin under the TNMM.
The taxpayer argued that the Tax Revenue Appeals Tribunal had improperly introduced a new issue by analysing whether finance costs represented functional costs attributable to the tested party.
The Court rejected that argument.
It held that the question of finance cost attribution was already central to the dispute and that the Tribunal had simply applied the OECD Transfer Pricing Guidelines as the appropriate analytical framework to resolve the issues before it.
The Court further concluded that no breach of natural justice had occurred and dismissed the appeal in its entirety.
The judgment reinforces several important principles for multinational groups:
- OECD guidance remains an influential interpretative tool in African transfer pricing disputes.
- Courts expect taxpayers to provide robust evidence supporting their transfer pricing methodology.
- Technical arguments will carry little weight where the underlying economic analysis supports the tax authority’s position.
A Common Thread Across Both Decisions
While arising in different jurisdictions and involving different taxes, both judgments reveal a broader trend emerging across Africa.
Courts are increasingly adopting purposive interpretations of tax legislation rather than relying solely on literal readings.
In both cases, the courts examined the commercial substance of the relevant activities and considered the wider policy objectives underpinning the legislation.
For taxpayers, this means that successful tax planning increasingly depends not only on technical compliance with legislation, but also on ensuring that transactions are commercially supportable, appropriately documented and capable of withstanding detailed scrutiny.
Looking Ahead
These decisions demonstrate the continued maturation of African tax jurisprudence and provide greater certainty in two important areas of international taxation.
The Mauritius judgment offers clarity on the operation of the 80% partial exemption regime and confirms that the focus should remain on where the relevant income-generating activities are carried out, rather than the taxpayer’s principal business.
Meanwhile, the Tanzanian decision reinforces the importance of robust transfer pricing documentation and evidential support when defending transfer pricing positions.
Together, they send a clear message that taxpayers operating across Africa should expect increasing judicial emphasis on commercial substance, contemporaneous documentation and the underlying purpose of tax legislation.
If your business operates across multiple African jurisdictions, now is an opportune time to review your tax structures, transfer pricing policies and substance requirements. Our tax team advises multinational groups throughout Africa and can help ensure your arrangements remain robust in an increasingly sophisticated tax environment. Get in touch to find out more.
English 
French