Transfer Pricing in Mauritius

The legal framework: one section doing the work of a statute

Transfer pricing in Mauritius rests on a single provision: section 75 of the Income Tax Act 1995, the 'application of arm's length test'. There is no standalone transfer pricing act, no method hierarchy, no comparability regulations — just a broad power for the Director-General of the Mauritius Revenue Authority to determine the net income of a business carried on in or from Mauritius as the amount that would have been derived had all its commercial and financial transactions and relations been wholly at arm's length. Section 75(1) reaches businesses controlled by non-residents, companies that are non-resident or majority non-resident-owned, and — critically — any case where the person controlling the activity is, in the Director-General's opinion, not dealing at arm's length. The Finance Act 2021 extended the section to activities carried on 'from Mauritius' and confirmed it has applied to all business activities since the Act's commencement.

Two developments have given this skeletal provision real definition. First, the Supreme Court's judgment in Innodis Ltd (2023 SCJ 73) confirmed that section 75 is not confined to cross-border dealings: it applies indiscriminately to any person controlling an income-earning business in Mauritius, so purely domestic related-party transactions face the arm's length test. Second, the Finance Act 2025 inserted statutory definitions of 'connected persons' and 'transaction' into section 75(4) — the latter expressly capturing dealings between a person and a cross-border business of the same person, bringing branch dealings squarely into scope.

The OECD Transfer Pricing Guidelines have no statutory force, but the MRA states in its MAP Guidance Notes that it will resort to them, and its auditors cite them routinely. Notably, Mauritius has no OECD Transfer Pricing Country Profile at all — a gap that makes reliable domestic-source analysis of the kind set out here all the more important.

Methods and comparability: OECD practice without OECD rules

Nothing in Mauritian law prescribes transfer pricing methods, a tested-party rule, or the use of an interquartile range. In practice, the vacuum is filled by the OECD Guidelines: taxpayers defend positions with functional analyses, method selection reasoning and database benchmarking, and the MRA increasingly frames its challenges in the same vocabulary. The practical standard of proof is therefore OECD-quality analysis, whatever the statute's silence.

Innodis shows how the MRA benchmarks when left to its own devices. Faced with unsecured, interest-free loans to five wholly-owned subsidiaries, it imputed interest at 13% — the rate Mauritian banks (MCB and SBM) charged on the taxpayer's own borrowings — and the Supreme Court upheld the adjustment. The lesson is twofold: the MRA prefers local-market evidence where it exists, and a taxpayer who arrives without an arm's length analysis effectively cedes the benchmarking exercise to the authority. Pending regulations under section 75(3) may eventually codify comparability rules; until then, the Innodis approach is the best available signal.

Documentation: what the Mauritius Revenue Authority expects

The Finance Act 2025, gazetted on 9 August 2025, marks the turning point: new section 75(2A) requires any company engaging in a transaction within section 75(1) to prepare and keep records 'in such manner as may be prescribed'. It is the first transfer pricing documentation duty in Mauritian history — and, as of the most recent sources, it remains a duty without a prescribed form. No regulations had been issued setting formats, monetary thresholds, submission deadlines, language requirements or safe harbours. Commentators widely expect OECD-style master file and local file requirements with functional and economic analyses; the prudent reading is that the obligation is live now and the detail will follow.

Country-by-Country reporting, by contrast, has been fully operational since 2018. The Income Tax (CbCR) Regulations 2018 apply to MNE groups with consolidated revenue of EUR 750 million or more whose ultimate or surrogate parent is in Mauritius, for fiscal years starting on or after 1 July 2018, with filing due 12 months after year-end in XML via the MRA's e-services portal. Constituent entities must notify the MRA of their UPE or surrogate status — secondary sources conflict on whether that notification falls at year-end or 12 months later, so the GN 20 of 2018 text should be checked directly. The MRA's own guidelines confine CbC data to high-level risk assessment: it may trigger an audit but cannot itself ground an adjustment.

There is no transfer pricing schedule in the annual return, no prescribed number of days to produce documentation, and records that must be kept in English or French under section 153(1), and retained for at least five years after the transaction (section 153(3)). Production requests run through the general powers in sections 124 and 127, the latter generally limiting demands to the three years of assessment preceding the current year.

Audits and enforcement

The absence of detailed rules has not translated into an absence of enforcement. Practitioners report a sustained rise in MRA audits and assessments framed in transfer pricing terms, with the OECD Guidelines cited as the analytical benchmark. Intra-group financing is the recurring battleground — deemed interest on interest-free loans and disallowance of excessive interest — and the MRA has shown itself willing to substitute its own pricing where the taxpayer produces no arm's length evidence.

The financial exposure is significant. Tax claimed on assessment, including a section 75 adjustment, carries a penalty of up to 50% under section 129(1A), plus a one-off 2.5% late-payment penalty and interest at 0.25% per month (both halved by the Finance Act 2025). There is as yet no documentation-specific penalty — those are expected in the pending regulations — and no documentation-based penalty protection; relief depends on the Director-General's discretion to waive penalties for 'just or reasonable cause' under section 128. CbC failures attract their own scale: MUR 5,000 initially, MUR 10,000 per month capped at MUR 120,000, and up to MUR 50,000 for inaccurate information, per the MRA's official framework.

One genuinely taxpayer-favourable change deserves emphasis: the Finance Act 2025 shortened the assessment window from three years to two years of assessment preceding the year the return is made. That compresses the MRA's audit runway for compliant filers — though no limit applies where no return was filed or fraud is involved.

Dispute resolution: a rebuilt domestic route and a serious treaty network

Domestically, a taxpayer has 28 days from a notice of assessment to object under section 131A, with the MRA required to determine the objection within four months; a payment of 10% of the tax claimed or MUR 5 million, whichever is lower, attaches generally under section 131A(2) (a bank guarantee may be substituted), and the objection is deemed allowed if the MRA misses its deadline. From 5 January 2026 appeals lie to the new Revenue Tribunal, which replaced the Assessment Review Committee with a more disciplined architecture: 28-day lodgment, optional binding mediation, a preliminary hearing within 120 days and a decision within 90 days of the hearing's end. Onward appeal to the Supreme Court is no longer confined to points of law, with the Judicial Committee of the Privy Council as the final tier — a route Innodis proved viable for transfer pricing disputes.

On the treaty side, MAP is available under Mauritius's 45 DTAAs, run by a dedicated unit within the Large Taxpayers Department. Requests must generally be made within three years of first notification (the assessment notice, in most cases), transfer pricing and corresponding adjustments are expressly covered, and the MRA targets resolution within 24 months with position papers inside 180 days. Mauritius has also opted into mandatory binding arbitration under Part VI of the MLI — meaningful leverage in stalled cases.

What Mauritius does not offer is an advance pricing agreement programme: the OECD dispute resolution profile records a flat 'No', and nothing in domestic law caters for APAs. The nearest substitute is the section 159 advance ruling — issued within 30 days of a written application and binding on the MRA for that taxpayer — a useful, if narrower, certainty tool.

Pillar Two and what changes in 2026

Mauritius entered the Pillar Two era with characteristic selectivity. The Finance Act 2025 inserted Sub-Part AF, imposing a Qualified Domestic Minimum Top-up Tax on members of MNE groups with revenue of EUR 750 million or more, at 15% minus the combined effective tax rate, effective for fiscal years ending on or after 1 January 2025. Only the QDMTT was adopted — no income inclusion rule, no UTPR — preserving the jurisdiction's competitiveness while capturing top-up tax that would otherwise flow abroad. Implementation has been iterative: the notification platform opened in October 2025, and an April 2026 communiqué pushed filing and payment deadlines falling before 29 June 2026 out to 30 June 2026.

The Finance Bill 2026 continues the recalibration: a 15-month QDMTT filing window, an amendment period extended to three years, the QDMTT penalty halved to 2.5%, a 5% deposit for Revenue Tribunal appeals, and binding pre-assessment 'compliance agreements' under which taxpayers trade away objection and appeal rights for certainty — measures to confirm against the gazetted Act. On Amount B, Mauritius has announced no position at all. The largest open item, though, remains the transfer pricing regulations under section 75: when they arrive, they will convert a one-section regime into a documented one almost overnight.

How practitioners should respond

The trap in Mauritius is mistaking regulatory silence for low risk. Section 75 has been enforced through to the Supreme Court, reaches purely domestic transactions, and now carries a live documentation duty whose prescribed form simply has not landed yet. Groups operating in or from Mauritius should prepare OECD-standard documentation now — master file logic, local functional analysis and benchmarking — so that whatever the regulations prescribe becomes a formatting exercise rather than a scramble. Intra-group financing deserves first attention: Innodis makes clear that interest-free and under-priced loans will be repriced against local bank rates if the taxpayer offers nothing better.

Beyond documentation, build the procedural calendar into planning: the two-year assessment window sharpens the value of clean contemporaneous files, the 28-day objection deadline is unforgiving, and MAP with MLI arbitration should be priced into any cross-border dispute strategy. Where certainty matters, a section 159 ruling is the only advance instrument on offer. Above all, watch the Government Gazette — the pending section 75 regulations, and the final text of the Finance Act 2026, will define the next chapter of transfer pricing in Mauritius.