Indirect Tax
Brazil advances Indirect Tax Reform with dual VAT system under Complementary Law 214/2025
Excerpts from various sources
The indirect tax reform initiated earlier this year through Complementary Law 214/2025 has been extended to consolidate multiple federal, state, and municipal taxes into a dual Value-Added Tax (VAT) system, introducing two new taxes:
- The Contribution on Goods and Services (CBS) at the federal level, and
- The Goods and Services Tax (IBS) at the state and municipal levels
The reform is designed to simplify compliance, reduce tax distortions, and create a more predictable tax environment. The transition to this new system is scheduled to begin in January 2026, with full implementation expected by 2033.
Sri Lanka delays implementation of VAT Rules for non-resident Digital Service Providers
Excerpts from various sources
In July 2025, the Inland Revenue Department (IRD) issued Gazette Notification No. 2443/30 mandating the non-resident persons supplying services via electronic platforms to consumers in Sri Lanka to register for Value Added Tax (VAT), charge 18% VAT on applicable services, and remit the tax to the IRD. However, the implementation of VAT on such cross-border provision of digital services has been postponed to 1 April 2026, which was originally scheduled to take effect from 1 October 2025.
Transfer Pricing
Amendments to Transfer Pricing Regulations – Mauritius
The Income Tax Act introduced in 1995 in Mauritius talks about the application of arm’s length test and empowers the Mauritius Revenue Authority (MRA) to adjust the taxable income of a taxpayer if its related-party transactions are not considered to be at arm’s length.
Mauritius government via the Finance Act 2025 (FA 2025), gazetted on 9 August 2025 provides for changes/amendments in Transfer Pricing Regulations as detailed in Section 75 of the ITA which are as summarized below:
- Mandatory maintenance of Transfer Pricing Documentation (TPD)
- Introduction of definitions of “Connected Person” and “Transaction”
The aforementioned amendments were introduced with an intention to bring the Mauritius TP regulations in line with the guidelines issued by the Organization for Economic Co-operation and Development (OECD).
Amendments as per The Income Tax Act
Maintenance of TPD
Under the existing regulations as detailed in the ITA under Section 75, there was no obligation to maintain any TPD for application of arm’s length test by the taxpayer in Mauritius wherein a taxpayer engaged in transaction between connected persons.
However, pursuant to the latest amendment, introduced by the FA 2025, the new subsection (2A) under Section 75 mandates that a taxpayer which engages in a transaction between connected persons and falls under the purview of application of arm’s length test shall prepare and keep records in such manner as may be prescribed.
Mauritius had implemented Country-by-Country Reporting (CbCR) requirements from FYs starting 1 July 2018. With the introduction of master file and local file requirements in Mauritius, three-tier documentation would be implemented in Mauritius, aligning with the OECD guidelines. The detailed guidance (including documentation timing and format) is expected to be introduced by way of issuance of separate guidelines in due course.
The regulations are expected to provide detailed guidance as to the form, content, and details of the documentation required to be kept by taxpayers with introduction of practical thresholds which shall define applicability of the newly introduced provisions.
Definitions
The latest amendment has also introduced two essential definitions to provide more clarification on the aspect of transactions between related parties under TP regulations prevalent in Mauritius. The FA 2025 defines the following:
-
Connected persons
Means any two (2) or more persons, where one controls the business or income earning activity of the other, in Mauritius or from Mauritius. -
Transaction
Any transaction or series of transactions, carried out directly or indirectly, between connected persons regardless of whether these transactions are legally binding or intended to be enforced through legal action; and includes cross-border transactions
With the introduction of mandatory TPD requirements under the Transfer Pricing Regulations in Mauritius, the scrutiny of related party transactions would be on the rise by the MRA. To conclude, the impact of these amendments will lead to:
- The new documentation requirements which are expected to align with OECD standards, including the Master File and Local File framework.
Businesses would require maintaining robust and contemporaneous TPD which shall also serve as a defense mechanism and reduce the risk of disputes with MRA