One of the most consequential business changes from the 2025-2026 Budget barely made the headlines, yet it pulls thousands of small businesses into the tax net for the first time: the compulsory VAT registration threshold dropped from Rs 6 million to Rs 3 million in annual taxable turnover, effective 1 October 2025.
If your turnover sits anywhere between Rs 3M and Rs 6M, you were almost certainly not required to register before — and you may be required to now. This guide explains who is caught, what you have to do, and what happens if you ignore it.
What actually changed
| Before 1 Oct 2025 | From 1 Oct 2025 | |
|---|---|---|
| Compulsory VAT registration | Turnover above Rs 6 million | Turnover above Rs 3 million |
| Standard VAT rate | 15% | 15% (unchanged) |
| Voluntary registration | Allowed below threshold | Still allowed |
A second, related change: from 1 January 2026, VAT applies to digital and electronic services supplied by foreign providers to Mauritius — relevant if you resell or heavily rely on overseas software and platforms.
Do you need to register? A quick test
You must register for VAT if any of these are true:
- Your taxable turnover exceeds Rs 3 million over a 12-month period.
- You expect your turnover to exceed Rs 3 million (for example, you've just won a large contract).
- You carry on a business in a category where registration is compulsory regardless of turnover (certain professions and trades — for example accountants, attorneys, and others specified by the MRA).
If you cross the threshold, you generally must apply within the timeframe set by the MRA after the end of the month in which you exceeded it. Don't wait for the year to close — the obligation is triggered as soon as you cross Rs 3M on a rolling basis.
"But my turnover was fine last year"
That's the trap. Turnover is measured on a rolling 12-month basis, not your accounting year. A business that grew steadily through 2025 may have been under Rs 6M all year, slipped past Rs 3M in the second half — and is now non-compliant without realising it. Booming months, a few big invoices, or a seasonal spike can all push you over.
If you are anywhere near Rs 3M, run the rolling 12-month total every month. It is far cheaper than back-taxes.
What registration actually means for you
Registering for VAT changes how you operate:
- You charge 15% VAT on your taxable sales (output tax).
- You reclaim VAT you pay on business purchases and expenses (input tax).
- You file VAT returns — monthly or quarterly depending on your category — and pay the net amount to the MRA.
- You issue compliant VAT invoices with your VAT registration number.
For businesses that sell mainly to other VAT-registered companies, this is often neutral or even positive — your clients reclaim the VAT you charge, and you reclaim VAT on your own costs. For businesses selling to final consumers, the 15% can make you 15% more expensive unless you absorb it, so cash-flow and pricing need a rethink. Our full VAT registration guide walks through input vs output tax, invoicing, and refunds in detail.
The cost of getting it wrong
Operating above the threshold without registering means you should have been charging and remitting VAT that you didn't. When the MRA catches up, you can face:
- Back-assessed VAT on past sales (which you may no longer be able to collect from customers),
- Penalties for late registration and late filing, and
- Interest on unpaid amounts.
It is one of the most expensive compliance mistakes a growing small business makes — precisely because it accumulates silently month after month.
What to do this week
- Pull your last 12 months of sales. Total your taxable turnover on a rolling basis.
- If you're over Rs 3M (or heading there), register through the MRA e-services platform without delay.
- Review your pricing. Decide whether you add 15% on top or absorb it.
- Set up bookkeeping that separates input and output VAT from day one — see our notes on accounting software for Mauritius businesses.
- Talk to an accountant if you're close to the line. The judgement call on timing is worth getting right.
FAQ
My turnover is Rs 4M but all my clients are companies — should I worry?
You're above the new threshold, so registration is compulsory. The good news: business clients reclaim the VAT you charge, so it's largely cash-flow neutral for you, and you get to reclaim input VAT on your costs.
I'm at Rs 2.5M and growing fast. Should I register for VAT voluntarily?
Possibly. Voluntary registration lets you reclaim input VAT and looks more established to B2B clients. The downside is added admin and 15% on sales to consumers. Weigh it deliberately.
Does the Rs 3M threshold include exempt or zero-rated supplies?
Thresholds are based on taxable turnover. Exempt supplies are treated differently. If your sales mix is complex, get a professional view before deciding.
When exactly did the Rs 3M VAT threshold take effect?
The lower Rs 3M threshold applies from 1 October 2025, as announced in the 2025-2026 Budget.
Not sure where you stand?
If your turnover is anywhere near Rs 3M, a short conversation with an accountant will tell you whether — and when — you must register. Find one in our directory of accountants, or read the complete VAT registration guide next.