By Feroz Hematally, Head of Tax, Africa, India and Middle East and Director of Tax and Mauritius
Mauritius has taken a decisive step in aligning with the OECD’s global tax reform agenda by introducing the Qualified Domestic Minimum Top-up Tax (QDMTT), effective from the 2025-26 fiscal year.
This move reinforces the country’s commitment to international tax transparency and positions it as a forward-looking jurisdiction in the evolving global tax landscape. But what does it mean for multinational enterprises (MNEs) operating in or through Mauritius?
Understanding the global context: Pillar Two and the GloBE rules
The QDMTT is part of the OECD’s Pillar Two framework, which aims to ensure that large MNEs pay a minimum level of tax (15%) regardless of where they operate. The Global Anti-Base Erosion (GloBE) rules, released in December 2021, provide a common approach for implementing this global minimum tax.
Mauritius first introduced the GloBE rules through its Finance Act 2022, with implementation measures detailed in the Finance Act 2025. The QDMTT is Mauritius’ domestic mechanism to ensure that the minimum tax is collected locally, rather than ceded to other jurisdictions.
Who will be affected?
The QDMTT applies to resident entities that are part of an MNE group with consolidated annual revenue of at least EUR 750 million in two or more of the four fiscal years preceding the year in question.
However, certain entities are excluded, including:
- Governmental entities
- International organisations
- Non-profit organisations
- Pension funds
- Investment funds
- Insurance investment entities
- Real estate investment vehicles
- Other prescribed entities
If an in-scope group’s effective tax rate (ETR) in Mauritius falls below 15%, the QDMTT will apply to bring the tax paid up to the minimum threshold.
How Is the QDMTT calculated?
The QDMTT calculation follows a four-step process:
Step 1: Calculate combined effective tax rate (ETR)
ETR = Total adjusted covered tax of ALL covered entities / Net GloBE income of all covered entities x 100
- Adjusted covered tax means “the current tax expense accrued in its financial accounting net income/loss with respect to covered taxes subject to adjustments as may be prescribed”
- Net GloBE income means “aggregate GloBE income of all covered entities less the aggregate of GloBE losses for that fiscal year”
- GloBE income means “GloBE income of a covered entity shall be its financial accounting net income/loss adjusted as may be prescribed by regulations. Income/expense from international shipping or qualified ancillary international shipping activities shall be excluded”
If ETR > 15%, no top-up tax applies.
Step 2: Calculate top-up tax rate
Top-up tax rate = 15% – ETR
Step 3: Calculate excess profit
Excess profit = Net GloBE income – substance based income exclusion (to be prescribed)
Step 4: Calculate top-up tax
Top-up tax = Excess profit * top-up tax rate (%)
Compliance and administration
Entities subject to QDMTT must:
- Notify the Mauritius Revenue Authority (MRA) of the designated filing entity within six months of the fiscal year-end
- File QDMTT returns and make payments within 15 months of the fiscal year-end
Penalties for late payment include a 5% penalty and 0.25% monthly interest.
Strategic considerations for MNEs
The introduction of the QDMTT raises several strategic questions for MNEs:
- How will Mauritius’ rules interact with those of other jurisdictions?
- Will there be offsets or credits for taxes paid elsewhere?
- What happens if the parent company is based in a country not implementing Pillar Two (e.g. the U.S. or India)?
These uncertainties make it essential for MNEs to model potential tax outcomes and review group structures in light of the new rules.
What should businesses do now?
With the QDMTT set to take effect soon, MNEs should:
- Conduct impact assessments to understand exposure
- Monitor regulatory updates for final definitions and exclusions
- Engage with tax advisors to prepare for compliance and reporting
How can we help?
Mauritius’ adoption of the QDMTT marks a pivotal moment in its tax policy evolution. While it introduces new compliance obligations, it also offers an opportunity for businesses to reassess their tax strategies and ensure alignment with global standards.
As always, our tax team in Mauritius is here to support you in navigating these changes. Please reach out if you’d like to discuss how the QDMTT may affect your operations.
