Reverse Charge VAT for Goods & Services from Abroad

Dear Colleagues,

We would like to inform you that under the Mauritius VAT Act, VAT registered businesses must account for VAT on goods and services received from foreign companies that are not registered for VAT in Mauritius. This process is called the reverse charge mechanism, and the VAT can generally be reclaimed as input tax.

What You Need to Know:
To ensure the reverse charged VAT is applied correctly, BIRGER. recommends that all suppliers:

•  Issue proper invoices including all necessary details:

1. Supplier’s name and address
2. Description of services provided
3. Amount payable
4. BIRGER.’s VAT and BRN details

• Send invoices to accounts.payable@birger.technology

Click here for the MRA Guide as well as the provision on reverse charge mechanism in the VAT Act.
 

The following information is for accounting reference:

Example of reverse charge for a purchase of 100 from a foreign supplier not registered for VAT in Mauritius:

1. Declare output tax of 15 (100 x 15%)
2. As the purchase is related to a taxable supply that will be made, 15 can be claimed as input tax.

Reverse charge on supply of services received from abroad:
 

1.  Where a person who does not belong in Mauritius and is not VAT registered makes a taxable supply of services which are performed or utilised in Mauritius, to a registered person, then all the same consequences shall follow under this Act as if the registered person had himself supplied the services in Mauritius and that supply were a taxable supply.
2. Where a supply of services is treated as made by a registered person under subsection (1), section 21 shall apply and the registered person may claim the tax on the supply of those services as input tax.
3.  The invoice or other documentation from the person making the supply shall be treated as a VAT invoice.4.    The value of the supply under this section shall be the amount paid or payable for the services.
4.  For the purposes of this section, a person does not belong in Mauritius if that person:

• has no permanent establishment in Mauritius for the carrying on of his business; or
• has his place of abode outside Mauritius.
   

Regards,

BIRGER.