Crypto Tax Legislation & Law in Mauritius

In accordance with Section 2 of the Virtual Assets and Initial Token Offering Act 2021, a “virtual asset” is defined as follows:

“A digital representation of value that may be digitally traded or transferred and may be used for payment or investment purposes; but does not include a digital representation of fiat currencies, securities and other financial assets that fall under the purview of the Securities Act.”

Given that there is currently no specific legislation issued for the taxation of virtual assets, general national tax law principles regulate the taxation of virtual assets. It is hoped that the Mauritius Revenue Authority (“MRA”) will issue a guidance to clarify the tax treatment for virtual assets.

The tax treatment applicable to the exchange of crypto-assets for conventional FIAT currency will broadly depend on whether the income derived from the exchange is treated as revenue or capital. If it is treated as capital gains, it will not be subject to any tax given that capital gains are exempt from tax in Mauritius. However, if it is treated as revenue in nature, it will typically form part of the taxpayer’s gross income as either income derived from business or income from any other source.

Yes, the same treatment as set out under Q2 should be applicable

According to the Income Tax Act 1995 (“ITA”) an individual’s gross income derived from business is subject to tax. Business is defined as any trade, profession, vocation or occupation, manufacture or undertaking, or any other income earning activity, carried on with a view to profit. Typically, one must have regard to the so-called “badges of trade”, as determined by case law, in order to determine whether a trade is being carried out. It is likely that the trading of virtual assets in the ordinary course of business will qualify as a professional activity. 

Given that there is no specific tax legislation, general tax law principles regulating losses will apply. In that regard, the tax treatment will depend on whether the virtual assets were held as capital or if they formed part of the taxpayer’s gross income. Pursuant to section 20 of the ITA, if the losses are income in nature, they may be offset against the gross income of the taxpayer for the succeeding 5 years. However, if they are held as capital, deductions for such losses would not be allowed.

5 years.

The Financial Services Commission (“FSC”), regulator for the non-banking financial services and global business sectors, has deemed it fit to issue a guidance note on the regulatory treatment of NFTs. The tax treatment of any profit or gains made in relation to NFTs may depend on the category that they are found. The guidance note establishes the following categories:

• NFTs as digital representation of collectibles but not used for payment or investment purposes (may be linked to an underlying asset)
• NFTs displaying characteristics of securities (overlapping characteristics of a digital collectible and a transferable financial asset)
• issuers of NFTs which fall under the category of virtual assets (i.e. those which are not digital collectibles and are not securities)
• persons who administer, hold, transfer or exchange NFTs which fall under the category of virtual assets (i.e. those which are not digital collectibles and are not securities).

In the absence of specific tax legislation, general tax law principles would be applicable to determine whether any profit or gains made in connection with the sale, disposal or exchange of NFTs are taxable.

Applying general national tax principles, mining may be equated to a business which will result in any income derived forming part of an individual’s gross income which is taxable.

There are no differences identified under the current law but the disposal of tokens received by staking may be regarded as taxable income based on the applicable of general principles of national tax law.  

Yes, the following may amount to taxable events:

• Self-employment/employment: any income derived from being self-employed or employed in the trading of virtual assets should be subject to personal income tax at the standard applicable rate for such categories of income
• Airdrops: the tax treatment for airdrops will broadly depend on whether the income derived is treated as capital or revenue. If the gains are capital in nature, airdrops will not be subject to any tax. However, if they are treated as income in nature, they may form part of the taxpayer’s chargeable income
• Hard Fork: any profit derived from the disposal of new virtual assets acquired through a hard fork may be subject to tax in line with the same principles highlighted above
• Futures: pursuant to Item 7 of Sub-Part C of the Second Schedule of ITA, there is an exemption of tax on any income derived from the transfer of securities. This includes options, futures, forwards and other derivatives of securities as per the Securities Act 2005.

Pursuant to section 123D (3A) of the ITA, every virtual asset service provider and issuer of initial token offerings is required to submit to the MRA, every year, a statement of financial transactions effected by an individual, a société or a succession that made a transaction exceeding MUR 250,000 or transactions exceeding MUR 2 million in the aggregate in the preceding year; or a person, other than an individual, a société or a succession, who made a transaction exceeding MUR 500,000 or transactions exceeding MUR 4 million in the aggregate in the preceding year.

However, this does not apply to an individual who is a non-resident.

Not at the moment.