Companies are assessed for a year beginning 1 July and ending 30 June on their income for the preceding year ending 30 June. Where a company closes its accounts at a date other than 30 June, it may elect to adopt as a basis year the accounting year ending in the 12-month period preceding the year of assessment.
Every company, both taxpayer and non-taxpayer, must file a return of its income on the basis of the income year preceding the year of assessment. The return must be filed within six months of the financial year-end.
Payment of tax
Any tax due should be paid when the return is filed and within the six months deadline.
Advance Payment System (APS)
Every company (except non-resident trusts and non-resident partnerships) having gross income exceeding MUR 10 million or that has taxable income is required to submit an APS statement and pay any tax for the quarter immediately following the end of the accounting year.
Tax under APS can be calculated based on the following:
- 25% of taxable income for the accounting year immediately preceding the commencement of that quarter or
- the actual taxable income of the current quarter.
The APS statement shall be filed and tax (if any) shall be payable within three months from the end of the quarter.
Companies that are required to contribute to the CSR Fund should, while submitting their APS statement, remit 25% of the CSR amount to be remitted to the MRA.
If timely payment is not made, a penalty representing 5% of the amount of tax due is payable. In addition, interest at the rate of 0.5% of the tax unpaid for each month or part of a month is payable until the tax is paid. A penalty of MUR 2,000 for each month or part of a month is also prescribed for failure to file a return, subject to a maximum of MUR 20,000.
Tax audit process
Tax audits are carried out on a sample basis throughout the year. Generally, the audits are fairly detailed, but more protracted enquiries are carried out into cases where fraud is suspected.
Statute of limitations
While there is no statutory time limit for recovering tax already assessed, the Director General is barred from making an assessment for a period beyond three years preceding the current tax year.
However, because of the COVID-19 period, there had been some changes in the law. The COVID-19 period started on 23 March 2020 and lapsed on 1 June 2020. If an assessment was to be made during the COVID-19 period, the Director General had up to two months after the COVID-19 period lapsed to make the assessment (i.e. 31 July 2020). Moreover, if the assessment was to be made up during a period of 30 days after the COVID-19 period lapsed, the Director General had up to 31 August 2020 to raise an assessment.
Topics of focus for tax authorities
The MRA pays special attention to the arm’s-length nature of any transactions between related parties and evidence of foreign tax suffered predominantly for GBL companies in respect of their claim for actual foreign tax credit.