Understanding E-Invoicing in Mauritius: An Intermediate Guide

Mauritius is ushering in a new era of digital taxation with the nationwide implementation of the e-invoicing system. As part of a broader effort to modernize its tax infrastructure, the Mauritius Revenue Authority (MRA) has introduced an e-invoicing mandate aimed at increasing compliance, improving efficiency, and streamlining VAT collection. The system is being rolled out in phases, each one building on the previous to ensure a smooth transition for businesses.

In this blog, we will take a closer look at the e-invoicing mandate in Mauritius, its phased implementation, and the specific requirements for businesses. We will also discuss how businesses can prepare for compliance and what the consequences are for non-compliance.

Overview of the E-Invoicing Mandate

Under the new mandate, all businesses registered for VAT that exceed a certain turnover threshold will be required to issue invoices electronically through an MRA-approved system. The initiative is being introduced in a phased manner to allow businesses to gradually adapt to the new system. Businesses must customize their existing Electronic Billing Systems (EBS) to meet the MRA’s specifications and ensure they are compliant.

Phase 1: Initial Rollout for Software Developers

Phase 1 of the e-invoicing system went live in June 2023, focusing on EBS software developers and solution providers. These entities are required to register their systems through the MRA e-Invoicing Developer Portal.  It also includes those involved with in-house ICT departments of both public and private organizations using EBS to issue invoices or receipts. By the end of Phase 1, developers are expected to ensure that their systems are ready for live use in Phase 2.

Phase 2: Registration and on boarding of Economic Operators

Phase 2 involves the registration of Economic Operators on the MRA e-Invoicing Portal. This phase focuses on ensuring that businesses have customized their EBS to meet the MRA's technical specifications. A unique EBS MRA ID will be generated after successful registration. Without this ID, businesses will not be able to issue valid invoices through the MRA system. 

Phase 3: Mandatory Issuance of Fiscal Invoices

Phase 3 will see the mandatory implementation of fiscal invoices, with a focus on Economic Operators who meet a certain turnover threshold. The businesses required to comply with the e-invoicing mandate are those with an annual turnover exceeding 100 million rupees. This phase will be rolled out in stages, and the first stage of mandatory fiscal invoicing is in effect from 15 May 2024. During this phase, businesses will be required to issue invoices electronically for both B2B and B2C transactions. 

E-Invoicing for B2B and B2C Transactions

One of the major benefits of e-invoicing is its role in improving the VAT reconciliation process.

• B2B Transactions: For business-to-business (B2B) transactions, the e-invoicing system is critical for VAT credit claims and reconciliation. The MRA has laid out specific guidelines for B2B invoicing, requiring businesses to include the VAT registration numbers of both the buyer and the seller. The transaction must be accurately recorded in the VAT system for proper credit and debit reconciliation.
• B2C Transactions: For business-to-consumer (B2C) transactions, businesses will be required to issue e-receipts, which should be submitted to the MRA system in real-time. This ensures that the MRA can track consumer purchases and ensure that the correct VAT is being collected.

Who Needs to Comply?

All businesses that are VAT-registered and meet the turnover threshold (currently set at 10 million rupees) are required to comply with the e-invoicing mandate. While the MRA has made it clear that certain smaller businesses may be exempt from the requirement, they are strongly encouraged to voluntarily adopt the system for improved efficiency and easier reconciliation with the VAT system. By switching to e-invoicing, businesses can benefit from streamlined operations, reduced paper waste, and quicker VAT refunds. However, non-compliance can lead to severe consequences. 

Penalties for Non-Compliance

Businesses that fail to comply with the e-invoicing mandate could face substantial penalties, including fines for each non-compliant invoice issued. The MRA has also stated that failure to comply could result in the rejection of VAT refund claims or delays in refunds. Businesses that submit invoices with errors or fail to submit them within the prescribed timeframes may also face enforcement actions, which could include further fines.

Conclusion

The e-invoicing mandate in Mauritius is a significant step toward digitizing the country’s tax system and improving VAT compliance. The phased approach allows businesses to gradually adapt to the new system while ensuring that they are fully compliant by 2024. With the right preparation, businesses can streamline their invoicing process, reduce administrative costs, and avoid penalties, all while contributing to the country’s broader goals of transparency and efficiency in tax administration.