Alteo Energy Ltd v Director General Mauritius Revenue Authority (Mauritius)

Why It Matters

The decision clarifies Mauritius’ tax‑exemption criteria, influencing multinational tax planning and the island’s compliance with global BEPS standards.

Key Takeaways

• Supreme Court affirmed interest exemption for Alteo under Item 7, Regulation 23D.
• Dispute centers on “core income‑generating activities” definition and location.
• Revenue Authority argues interest not part of electricity production substance.
• Plaintiffs cite BEPS guidelines linking tax benefits to substantive activity.
• Outcome could reshape Mauritius’ tax‑exemption framework for non‑bank lenders.

Summary

The hearing concerned Alteo Energy Ltd’s challenge to the Mauritius Revenue Authority over a partial tax exemption for interest income earned in the 2019‑20 fiscal year. The dispute hinged on whether the interest, representing roughly 0.25% of the company’s turnover, qualified for exemption under Item 7, Sub‑part B, Part 2 of the Income Tax Act and Regulation 23D, which require that a company’s core income‑generating activities be carried out in Mauritius.

The Revenue Authority argued that Alteo’s core activity—production and sale of electricity—did not include interest generation, and therefore the exemption should be denied. Alteo countered that the statutory language only mandates that the core activities be substantive, not that every income stream be a core activity, and that the interest income, though ancillary, was still linked to the company’s overall business conducted in Mauritius. The Supreme Court reversed the lower tribunal’s decision, finding the exemption applicable, while the Authority appealed.

Key excerpts from the proceedings highlighted the BEPS (Base Erosion and Profit Shifting) framework, with counsel emphasizing that tax benefits must be tied to genuine economic activity in the jurisdiction. The parties cited BEPS paragraphs stressing a “substantial activity requirement” that connects the income to the core activities that generate it, underscoring the tension between statutory interpretation and international tax standards.

The ruling could set a precedent for how Mauritius applies its interest‑exemption regime, potentially broadening relief for non‑bank lenders and other entities with ancillary income streams. It also signals to multinational firms that Mauritius may align its tax incentives with BEPS principles, affecting future structuring and revenue‑authority enforcement strategies.

Original Description

Alteo Energy Ltd (Respondent) v Director General, Mauritius Revenue Authority (Appellant) (Mauritius)

Case ID: JCPC/2025/0103

https://jcpc.uk/cases/jcpc-2025-0103.html

Hearing date: 10 June 2026.

Issue:

Is the First Respondent entitled to a partial tax exemption on interest income received from certain loans?

Facts:

The First Respondent (“Alteo”) is a company which forms part of the Alteo Group. While the Alteo Group principally trades in the sugar industry, Alteo itself derives its income (a turnover of Rs 817,200,269) mainly from selling electricity to the Central Electricity Board. In the relevant tax year, in addition to this income, various borrowers paid interest to Alteo under loans that Alteo had provided (a turnover of Rs 2,151,622).

Alteo sought to take advantage of a partial income tax exemption on the interest income pursuant to section 7(2) and Item 7 of Sub-Part B, Part II, Second Schedule, Income Tax Act 1995 (“Sub-Part B”). Those provisions relevantly state that 80% of interest derived by a company other than a bank shall be exempt from income tax, provided that the company satisfies certain “conditions relating to the substance of its activities” set out in Regulation 23D(2) of the Income Tax Regulations 1996. The relevant condition for the purposes of this appeal is that the company “carries out its core income generating activities in Mauritius”.

The appeal relates to the construction of two parts of this legislation. First, the condition contained in Regulation 23D(2)(a)(i), namely that the company “carries out its core income generating activities in Mauritius” (“the CIGA condition”). Secondly, the reference in Sub-Part B to “the substance” of the company’s activities.

The Mauritius Revenue Authority considered that Alteo was not entitled to the partial income tax exemption. The Assessment Review Committee upheld that decision on the basis that the CIGA condition was not satisfied. The Supreme Court of Mauritius overturned that decision.

The Director-General of the Mauritius Revenue Authority now appeals to the Privy Council.