Mauritius has taken a significant step in modernizing its tax landscape with the official publication of the Finance Act 2025, gazetted on 9 August 2025. Many of the Act’s measures apply retroactively from 1 July 2025, aligning with the country’s fiscal year (1 July – 30 June).
A key highlight of this year’s legislation is the introduction of a defined Transfer Pricing (TP) framework for multinational enterprises (MNEs) operating in Mauritius — a major structural shift for a jurisdiction that previously relied on limited statutory provisions.
Transfer Pricing in Mauritius Before 2025
Historically, Mauritius did not have a comprehensive transfer pricing regime. Instead, it relied on Section 75 of the Income Tax Act 1995, which empowered the Mauritius Revenue Authority (MRA) to adjust taxable income when dealings between related or controlled entities were not at arm’s length.
Key features of the pre-2025 framework included:
- No formal TP documentation requirement — companies were not obligated to maintain benchmarking studies, comparables, or transfer pricing analyses.
- Broad application of Section 75 — including cases where entities were controlled directly or indirectly by non-residents, or where more than 50% shareholding was foreign-owned.
- Absence of thin capitalization rules, although the deductibility of interest paid to non-residents or related parties could still be denied if deemed unreasonable.
Overall, while TP risk existed, the system lacked clear procedures, compliance expectations, or safe-harbor guidance.
What the Finance Act 2025 Introduces for Multinational Companies
Mandatory Transfer Pricing Documentation
For the first time, companies engaged in related-party transactions must prepare and maintain transfer pricing documentation.
The specific format, content requirements, thresholds, and method of submission will be defined in forthcoming regulations.
New Definitions: “Connected Persons” and “Transaction”
The Act introduces broad definitions that capture control relationships and any form of related-party arrangement.
This means the TP rules now apply to both domestic and cross-border dealings, covering transactions between Mauritian affiliates as well.
Enhanced MRA Audit and Adjustment Powers
With documentation now compulsory, the MRA is expected to examine pricing methods more closely. Taxpayers will need to justify:
- interest rates
- profit margins
- cost allocations
- pricing methodologies
Accepted TP analyses based on OECD principles will be essential.
Domestic Minimum Top-Up Tax (DMTT / QDMTT)
Mauritius has introduced a 15% minimum effective tax rate for entities within large multinational groups.
Even though this is not strictly a TP rule, intragroup pricing directly influences effective tax rate outcomes and potential top-up tax exposure.
Alternative Minimum Tax (AMT)
Specified sectors — including hotel, insurance, telecom, and financial intermediation — are subject to a minimum tax of 10% of book profits if standard corporate tax falls below that level.
This can reduce the benefit of aggressive intragroup deductions.
Penalties, Interest Caps, and Assessment Period Limits
The Act introduces caps on penalties and interest, limiting them to the amount equal to the tax owed.
It also restricts back assessments to a shorter period, increasing predictability but creating tighter audit timelines.
No Safe Harbors or Submission Deadlines Yet
The Act does not yet specify:
- exemption thresholds
- safe-harbor profit margins
- submission timing
- electronic filing requirements
These will be clarified in upcoming regulations.
Alignment With OECD Pillar Two
Mauritius’ new top-up tax regime aligns with the OECD Global Minimum Tax (Pillar Two).
Transfer pricing outcomes will affect both local compliance and global reporting obligations.
What This Means for Businesses and Tax Professionals
Documentation Preparedness
Companies should begin assembling:
- transfer pricing studies
- benchmarking analyses
- functional/asset/risk (FAR) profiles
- internal policy documentation
This preparation is important even before regulations are finalized.
Domestic Transactions Now in Scope
The new definitions of connected persons and transactions extend obligations to purely domestic related-party dealings.
Impact of Minimum Tax Regimes
Aggressive pricing may push effective tax rates below the required minimum, leading to additional tax liabilities and reduced benefits from deductions.
Higher Audit Risk and Burden of Proof
Taxpayers will bear increased responsibility to justify pricing decisions with robust evidence.
Dependence on Upcoming Regulations
Compliance requirements will depend heavily on the forthcoming regulatory framework, which will clarify documentation and filing rules.
Interaction With Global Minimum Tax
TP strategies now affect not only Mauritian tax outcomes but also global top-up tax exposure under the Pillar Two framework.
Conclusion
The Finance Act 2025 represents a major shift for Mauritius, moving from a limited transfer pricing environment to a structured, documentation-driven, internationally aligned regime. Multinational companies should begin preparing early to ensure compliance, mitigate audit risks, and integrate their transfer pricing strategy with both domestic rules and global minimum tax requirements.
If your business operates in Mauritius or is part of a multinational group, now is the time to prepare. We help companies design compliant transfer pricing policies, prepare documentation, assess minimum tax exposure, and navigate MRA audit expectations.
Get in touch with our team here to ensure your business stays compliant, competitive, and audit-ready in a shifting global tax landscape.
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