Investor Presentaiton

pwc Tax Times www.pwc.com/mu/taxtimes Mauritius VAT and the international business landscape 26 Oct 2016 For example, if a domestic holding company in Mauritius (typically non-VAT registered) pays management fees to a third party in a foreign country to oversee its foreign operations and VAT has been applied as consumption is in the country of origin, such a company in Mauritius will suffer a double hit in respect of the input VAT now being recognized. See the illustration. NON-VAT REGISTERED PERSON VAT REGISTERED PERSON Foreign Mauritius Foreign Mauritius Supplier Company Supplier Company The issue of double imposition of VAT can be far reaching. Marketing fees, sales commission fees, portfolio management fees, procurement fees paid to foreign suppliers by non-VAT registered persons are likely to suffer the same unintended consequences of this new piece of legislation as those services are likely to be consumed in the country of origin and VAT applied thereon. Whilst the CFA Guidelines is not intended to interfere with the sovereignty of a country and its ability to implement rules to limit or deny the recovery of input VAT, tax administrations should follow good tax principles to preserve neutrality. The provisions being introduced under FA2016 should be assessed against this principle! Management fees charged Local VAT (Assume 20%) Cost of import of service Reverse charge provision (15% as output VAT) Claim for input vat under reverse charge provision Total Cost of import of service USD 1,000 200 USD USD 1,000 - 200 1,200 180 1,380 USD - 1,200 180 (180) 1,200 Tax Team PwC Mauritius For more information, please see contact details on the website www.pwc.com/mu/taxtimes © 2016 PricewaterhouseCoopers Ltd. All rights reserved. PwC refers to the Mauritius member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.

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