INCOME TAX

1. BURMEISTER & WAIN SCANDINAVIAN CONTRACTOR v THE DIRECTOR-GENERAL, MRA, ARC/IT/270-20 & ARC/VAT/131-20

FACTS:

• The MRA lapsed the objections of the Applicant for failing to pay the statutory 10% of the amount of tax claimed in the Notices of Assessment.

ISSUE:

• The issue to be addressed by the ARC was the decision of the MRA to lapse the objections of the Applicant on the ground of non-payment of 10% of the amount of tax claimed.

HELD:

• The ARC ordered the Applicant company to pay an amount of MUR 10 million or give security by way of bank guarantee for that amount within one month of the date of this Ruling.

• The Committee then recommended the MRA to entertain the Notices of Objection of the Applicant if the latter complies with the above requirement.

• In reaching this decision, interestingly, the Committee noted that the Applicant in this case was not disputing that it had and still has the means to satisfy the 10% requirement. Rather, the Applicant contended that it had “good reason” not to pay the 10% since, broadly, the assessment was grossly exaggerated and exceptionally unfair.

• Conscious that at this stage it could only limit itself to the nature of the assessments and the response of the Applicant, the committee had regard to some elements and took the view that the Applicant had an arguable case on the merits involving substantial questions of facts and law.

• The committee also bore in mind the rationale of the 10% requirement as laid down in the oft-quoted case of Dahari & Ors v Director General, MRA & Ors [2009 SCJ 206], which in essence is to ensure that taxpayers who object to assessment to

countenance an objection are not sending the revenue authorities up in a wild goose-chase.

• The Committee accordingly carried out a balancing exercise between these conflicting interests in the specific circumstances of the case and found that the MRA’s interest would not be prejudiced.

• The Ruling, the Committee reasoned, is limited to the issue of 10% requirement and cannot be said to constitute a “final” decision of the Committee but rather a step in determining the real issues in contention between the parties.

• HOLIDAY VILLAGES MANAGEMENT SERVICES (MAURITIUS) LTD v THE DIRECTOR-GENERAL, MRA, ARC/LTD/01-11

FACTS:

• The Applicant is a subsidiary of Club Med SA (CMSA), the French holding company which operates Club Med hotels around the world.
• In Mauritius, the hotels managed by the Applicant are: La Pointe aux Cannoniers and Albion Village.
• The Applicant is registered as an employer for PAYE purposes and employes both local and expatriate employees.
• The expatriate employees pay income tax in Mauritius on their monthly salary, which includes “food and accommodation” and “tax benefits” that are added for the calculation of PAYE.
• However, two items appear in the Financial Statements of the Applicant under the heading “Wages and Salaries” but on which no PAYE has been retained by the Applicant – “Recharge for social security” and “Occupational medicine”.
• The MRA considered that these two items represent taxable benefits in the hands of the expatriate employees and are not exempt income since the payments were not made under a superannuation fund approved by the MRA.

ISSUE:

• The issue between the parties were the tax treatment of the two items labelled “Recharge for social security” and “Occupational medicine”.

HELD:

• The Committee set aside the Notice of Assessment.

• In reaching this decision, the Committee found as follows:

• Recharge for Social Security:

• The ARC found that the “Recharge for Social Security” represents “des charges patronales” or “cotisation patronale”, which is a form of tax imposed on CMSA as an employer to finance the French welfare state.
• While the number of employees and their wages determine the base or “assiette” of this “cotisation patronale”, the expatriate employee does not receive any advantage. [Emphasis is ours]
• The “cotisation patronale” therefore does not represent any benefit accruing to the expatriate employee of the Applicant in the capacity as employee.
• Through payment of the “cotisation patronale”, CMSA discharges one of its legal obligations as an employer.
• Since the expatriate employees are on secondment with the Applicant, CMSA relayed the said payment to the Applicant.
• The Applicant rightly did not retain any PAYE in this context since the said “recharge for social security” does not constitute any benefit whatsoever to the employee qua employee, let alone a taxable benefit. [Emphasis is ours].

• Occupational medicine:
• The Committee found established that the medical expenses in lite relate to a medical certificate which has to accompany an application for a work permit of an expatriate (vide Non-Citizens (Employment Restrictions) Act & Employment (Non-Citizens) (Restriction) Regulations 1973).
• Therefore, providing the medical certificate was one of the obligations of the Applicant as employer and the amount paid was not a taxable benefit in the hands of the employees.
• Hence, the Applicant was right in not deducting any PAYE from the employees’ wages in relation to expenses incurred in discharging its own obligations for a mandatory medical certificate.

CUSTOMS

1. NESTLE’S PRODUCTS (MAURITIUS) LTD v THE DIRECTOR-GENERAL, MRA, ARC/CUS/69-21

FACTS:

• The Applicant imported a consignment which included Nestle Sweetened Condensed Milk (SCM).
• The SCM was declared at Customs under HS Code 04029990.
• After the consignment was examined by the Customs Department of the MRA, the Customs Tarrif Unit of the MRA ruled that the SCM must be classified under HS Code 0402.99.10. The Tarrif unit considered that SCM is milk from which water has been evaporated and to which sugar has been added; it is a product in liquid form containing sugar.
• It is apposite to note that under the classification determined by the MRA – 0402.99.10, the product would be subject to Excise Duty at a rate of “6 cents per gram of sugar”, whereas under the classification declared by the Applicant – 04029990, the product would be exempt from Excise Duty.
• A notice of non-payment/Underpayment was issued to the Applicant. The Applicant objected to the Notice and its objection was disallowed. The Applicant, being aggrieved by this decision, made representations to the ARC.

ISSUE:

• Whether the SCM imported by the Applicant should be classified under HS Code 0402.99.90 as declared by the Applicant           or under HS Code 0402.99.10 as determined by the MRA. The precise issue was whether the SCM was a liquid, as averred by the MRA, an averment which was denied by the Applicant.

HELD:

• The ARC found that the classification determined by the MRA was incorrect.
• In reaching this decision, the ARC referred to the Supreme Court case of Lising & Co Ltd v The Director General, Mauritius Revenue Authority [2012 SCJ 478] which

considered and approved the principles applicable in cases of this type. They are as follows:

• “…the decisive criterion for the classification of goods for customs purposes is in general to be sought in their objective characteristics and properties as defined in the wording of the relevant heading of the Combined Nomenclature and in the section or chapter notes…”
• “…the intended use of a product may constitute an objective criterion for classification if it is inherent to the product, and that inherent character must be capable of being assessed on the basis of the product’s objective characteristics and properties…”
• “…the Explanatory Notes drawn up, as regards the CN, by the Commission and, as regards the HS, by the World Customs Organisation are an important aid to the interpretation of the scope of the various headings but do not have legally binding force…”
• The Court also referred to Second Skin & Co Ltd (In Receivership) v Mauritius Revenue Authority & Anor [2010 SCJ 93] where the Supreme Court deemed it proper to consider the “economy of the law in giving different customs, treatment to goods” when determining the classification of goods.
• Applying these principles, the ARC went on to analyse the 2023 ‘Global report on the use of sugar-sweetened beverage taxes issued by the WHO, the Finance Act 2012 (which introduced excise duty on sugar content), the Budget Speech of 2016/2017 (which reinforced the measure), a Communique from the MRA, as Tax Administrator, entitled ‘Excise Tax On Sugar Content on Sugar Sweetened Non-Alcoholic Beverages’, and the Budget Speech 2020 (where measures to double the excise duty were announced).
• In light of the analysis, the ARC took the view that “liquid” can only mean “beverages” as opposed to “the liquid state of matter”
• Accordingly, the ARC concluded that SCM does not fall within the meaning of “liquid” as set out in the description of HS Code 0402.99.10 [emphasis is ours]

REGISTRAR GENERAL

1. STELLA TELECOM (MAURITIUS) CO LTD v REGISTRAR-GENERAL, ARC/RG/138-19

FACTS:

• Messrs Libeau and Bernauer transferred part of the shares they held in Societe Parc Eco Vert to the Applicant by virtue of a deed for a “prix” declared at Rs 1.00.
• The Respondent reassessed the value of the transferred shares from Rs 1.00 to Rs 15,600,000.00 and claimed additional Registration Duty amounting to Rs 779,800.
• Feeling aggrieved by this claim, the Applicant lodged representations with the ARC.
• It was not disputed by the Respondent that the subject matter of the transfer in the present case were shares (“parts d’intérêts”) of a “société civile” which did not hold immovable property.
• At any rate, Societe Parc Eco Vert was clearly described in the deed of transfer as “une société civile”.

ISSUE:

• The Applicant moved to raise a point of law to the effect that it was not liable to registration duty having regard to paragraph 8 of Item J of Part 1 of the First Schedule of the Registration Duty Act (hereinafter referred to as Item J of RDA).
• The Respondent objected to this point being raised.
• Applicant contended that Item J of RDA stipulates that the transfer of shares of a “company” attracts duty only if the “company” holds immovable property and the definition of “company” under sections 2 and 24 of the RDA includes a “société”.
• The main argument of the Respondent was that although the Applicant was not liable to registration duty under paragraph 8(1)(b) of Item J RDA since it does not hold any immoveable property, it was caught under paragraph 8(1)(a) where there is no requirement of holding immoveable property.
• In support of its argument, the Respondent submitted that the only acceptable interpretation was to read down the definitions in section 2, such that company would only include successive companies and societes, and in parallel societe would only include successive companies and societes.
• The Respondent suggested to do away with the words leading to absurdity and to read the definitions in Section 2 without those words.

HELD:

• The ARC found upheld the point of law raised by the Applicant.

• In reaching this decision, the committee referred to and applied the principles applicable to the statutory interpretation of taxing provisions as recently recapped in the case of Alteo Energy Ltd v Assessment Review Committee & Anor [2025 SCJ 47].

• In light of these principles, the Committee explained that it could not accept an interpretation whereby it had “to do away with [certain] words” specifically contained in a statutory definition and “read the definitions down without those words”.

• The ARC concurred with the Applicant that this would be going against the literal and strict interpretation of the statute i.e. Section 2 of the Registration Duty Act, going to the preposterous extent of obliterating an express word or term of a statute (Section 2), which term forms part of a definition that was introduced in the statute.

• The Committee stated that it was bound to give effect to these specific definitions introduced in the RDA, and accordingly adopt the interpretation of the Applicant.

SELECTED JUDGMENTS OF THE SUPREME COURT

1. AUMARY H. v THE MAURITIUS REVENUE AUTHORITY & ANOR 2025 SCJ 127

FACTS:

• The Appellant was charged with evading payment of taxes, which are payable, while being concerned in the management of a body corporate, Sealicious Ltd.
• The offences were in relation to the import of various types of seafood as per Mauritius Customs Single Goods Declaration forms.
• The Appellant pleaded guilty and was represented by counsel.
• The Appellant was found guilty as charged and sentenced to pay a fine of 2.5 times the amount of taxes short paid.
• The Appellant challenged both his conviction and sentence.

ISSUE:

• The Appellant contended that he did not benefit from a fair trial since the offences were committed by the company so that he was interviewed as a director and representative of the company, which deprived him of the opportunity, at enquiry stage, to give in his version in his personal name.
• The Appellant also contended that his sentence was manifestly harsh and excessive and/ or wrong in principle.

HELD:

• The Court found no merit in the appeal and dismissed it.
• In reaching this decision, the Court explained that it was averred in all the counts of the information that the Appellant was being prosecuted as a person “who, at the time of the commission of the offence, was concerned in the management of a body corporate, Sealicious Ltd”, and so it was clear that the Appellant was prosecuted as a person who was concerned in the management of the company, and not personally. [emphasis is ours].
• The Court further explained that, while it is true that the offences were committed by the company, a company acts through a board of directors who are answerable for the company’s actions and omissions, and in this case the Appellant was the sole director of the company at the time of the commission of the offences. [emphasis is ours]
• Concerning the sentence, the Court found that the Magistrate took into account all the relevant factors and applicable principles and exercised his discretion to sentence the

Appellant to pay a fine which was less than the prescribed fine under S. 160(1)(b) of the Customs Act, namely a fine of 2.5 times the amount of taxes underpaid under each of the 6 counts of the information.

• MAURITIUS REVENUE AUTHORITY, DG v MAURITIUS FREEPORT DEVELOPMENT CO. LTD & ANOR 2025 SCJ 153

FACTS:

• This was an appeal case against a decision of the Assessment Review Committee (ARC) delivered on 9 March in Mauritius Freeport Development Co. Ltd v Director-General, Mauritius Revenue Authority, ARC/IT/677-15; ACR/IT/441-16 where the ARC ruled in favour of the first respondent, allowing it to claim annual capital allowances under section 24 of the Income Tax Act (ITA) and Regulation 7(1)(b) of the Income Tax Regulations 1996 in relation to assets acquired in 1995 to 2005.
• The Appellant contended that annual allowances must be claimed in the income year in which the asset is put to use, and deferral was not permitted under the law.
• The first Respondent maintained that s.24 ITA provides flexibility, allowing a taxpayer to choose when to claim allowances, as part of tax planning.
• The ARC accepted the first Respondent’s position, holding that claiming the allowance was optional. [emphasis is ours]
• The Appellant, aggrieved by the decision, appealed to the Supreme Court.

ISSUE:

• Whether s.24 ITA provides a taxpayer with the discretion to claim annual allowances in any income year of their choosing, or whether the allowance must be claimed in the specific income year in which the capital expenditure was incurred and in each of the succeeding years as prescribed.

HELD:

• The Court allowed the appeal.
• In reaching this decision, the Court relied on the plain and literal wording of s.24 ITA, which provides that allowances shall be allowed “in that income year and in each of the succeeding years.”
• The Court emphasised the statutory phrase “in that income year” rather than “any income year”, thereby rejecting the view that taxpayers can choose when to claim.
• It held that s.24 ITA imposes a requirement to claim allowances in a prescribed sequence, starting from the year the expenditure was incurred.

• The Court rejected the Committee’s reliance on interpretive principles as the statutory language is clear and unambiguous.
• The Court also reaffirmed key principles of tax law:
• The burden is on the taxpayer to prove entitlement to the allowance.
• There is no room for equity in tax statutes— only the express language of the law governs.

LEGISLATIVE UPDATES

THE INCOME TAX (FINANCIAL ASSISTANCE FOR PAYMENT OF SPECIAL ALLOWANCE) REGULATIONS 2025

• These regulations, made under the Income Tax Act (ITA), define the categories of employers eligible for financial assistance in paying the special allowance to employees.

Recall: section 150EC(2)(c) of the ITA provides “Subject to this Part, the Director-General shall pay to an employer, in respect of each of its eligible employee, an allowance equivalent to the special allowance paid to that employee, where the employer is an employer falling within such other category as may be prescribed…

• Eligible employers include:

• Charitable institutions;

• NGOs registered with the National Social Inclusion Foundation;

• Registered religious bodies;

• Trade unions;

• Enterprises (excluding export enterprises) or SMEs with a turnover not exceeding Rs 750 million in year of assessment 2023 – 2024, operating in:

• BPO

• Security services

• Cleaning services

• Construction

• Public transport providers (bus and light rail operators)

• Exclusion:

• No allowance is payable where the special allowance is already funded by the Ministry of Social Integration, Social Security and National Solidarity or the National Social Inclusion Foundation.

• Such employees must not be included in the “Special Allowance 2024” return submitted under section 150EC (7) of the ITA, claiming the allowance payable.

• Gazetted on the 8^th February 2025.

CUSTOMS (AMENDMENT) REGULATIONS 2025

• Rule 19 of the Customs Regulations 1989 have been amended to provide more attempts and a longer time frame for candidates to pass the oral exam required to be appointed as a customs broker under section 119 of the Customs Act.

• Previous Rule:

• A person could sit for a maximum of 2 subsequent oral examinations (after failing the first one).

• These had to be taken within 2 years of the first oral exam.

• No further extension was allowed.

• Amended Rule:

• A person may now sit for 3 subsequent oral examinations (instead of 2).

• These must be taken within 3 years of the first oral exam.

• No further extension remains the rule.

• Gazetted on 22^nd February 2025