The Judicial Committee of the Privy Council is set to hear an appeal on 7 October brought by Mauritius Freeport Development Co. Ltd (MFD) in a long-running tax dispute with the Mauritius Revenue Authority (MRA). A judicial panel comprising Lord Briggs, Lady Rose, and Lord Doherty will preside over the case. The dispute centers on a sum of Rs 84,698,483 in annual allowances claimed by MFD for the 2012 tax year.
The tax dispute stems from how and when MFD chose to claim its capital allowances. MFD initially claimed deductions up to the 2006 tax year, paused them between 2007 and 2011, and resumed claims in 2012. The firm argued it was entitled to carry forward the deductions to offset them against more profitable financial years. However, the MRA rejected the Rs 84,698,483 claim on 30 June 2015.
The MRA's rejection significantly altered MFD's financial declarations, reducing its declared tax loss for 2012 from Rs 158.6 million down to Rs 73.9 million. The knock-on effect also impacted the 2013 financial year, transforming a previously declared loss of Rs 34.4 million into a taxable profit of Rs 50.3 million. According to MFD's submission, the subsequent assessment notice highlighted a sum of Rs 11.2 million, plus accumulated interest.
The litigation has traversed multiple legal tiers with conflicting outcomes. On 9 March 2023, the Assessment Review Committee ruled in favour of MFD, determining that taxpayers could choose whether or not to claim such allowances. However, on 14 April 2025, the Supreme Court overturned that decision, ruling that Section 24 of the Income Tax Act does not grant taxpayers the freedom to select which financial year deductions can be claimed.
Representing their respective positions in London, MFD argues that the legislation sets neither a minimum rate nor a uniform rate, nor does it mandate that allowances be claimed without interruption. Conversely, the MRA acknowledges that claiming these allowances is optional but maintains that any interruption requires the amount to be calculated as though the allowances had been applied every single year at a uniform rate.
The MRA has additionally noted that, based on its interpretation of the law and a review of documents for subsequent financial years, a sum of Rs 40,983,397 could potentially be admitted as a deduction. This figure remains unfinalised, and any ongoing disagreement between the parties could see the calculation referred back to the Revenue Tribunal.
The Privy Council's decision is expected to have significant implications for tax disputes in Mauritius. The case will provide clarity on the interpretation of Section 24 of the Income Tax Act and the flexibility afforded to taxpayers in claiming capital allowances.
Key points
- The Privy Council will hear an appeal by MFD in a tax dispute with the MRA over Rs 84.7m in annual allowances claimed for the 2012 tax year.
- The dispute centers on MFD's decision to pause and resume claiming capital allowances, which the MRA rejected in 2015.
- The case will provide clarity on the interpretation of Section 24 of the Income Tax Act and the flexibility afforded to taxpayers in claiming capital allowances.
