Mauritius: Entitlement to 80% partial exemption on interest income (Privy Council judgment)

The Judicial Committee of the Privy Council on June 30, 2026, held that a Mauritian company is entitled to the 80% partial exemption on its interest income, dismissing the appeal of the Mauritius Revenue Authority (MRA).

Background

The taxpayer is a Mauritian company primarily engaged in the production of electricity. In addition to its operating income, the taxpayer earned interest income from loans provided to related entities. For the 2019-2020 tax year, the taxpayer claimed the 80% partial exemption on its interest income.

The MRA denied the claim on the basis that the activities generating the interest income did not constitute the taxpayer's core income-generating activities (CIGA). The taxpayer appealed the assessment to the Assessment Review Committee (ARC), which upheld the decision of the MRA, stating that the interest income was unrelated to the taxpayer's CIGA. Dissatisfied with the ARC’s decision, the taxpayer appealed to the Supreme Court of Mauritius, which overturned the previous decision and confirmed that the taxpayer is entitled to the 80% partial exemption on its interest income. The MRA subsequently appealed the Supreme Court’s decision to the Judicial Committee of the Privy Council.

Key takeaways

The Judicial Committee of the Privy Council clarified that a company can qualify for the 80% partial exemption even when it is not in the business of lending or financing. Interest income does not need to be a core activity of the company. Even when interest income is incidental to the main operations of the company, it may still qualify for the exemption, subject to meeting the substance requirements.

This judgment makes clear that companies can qualify for the 80% partial exemption when the prescribed conditions are met, removing uncertainty following the Supreme Court judgment in February 2025.

Read a July 2026 report prepared by the KPMG member firm in Mauritius