Landmark Judgement on Eligibility to Partial Exemption for Interest Income

The Supreme Court of Mauritius has on 31 January 2025 rendered its judgement in the case of Alteo Energy Ltd (AEL) v Assessment Review Committee (ARC) and Director General, Mauritius Revenue Authority (MRA).

AEL has as main business activity the production and sale of electricity. In the year ended 30 June 2019, they claimed a partial exemption of 80% on interest income they derived from excess cash deposited with a sister company. However, the MRA had denied this claim on the ground that the interest income represented only about 0.25% of the total income of AEL and was therefore not derived from the core income generating activities of the company. The ARC had subsequently ruled in favour of the MRA. In its aforementioned case before the Supreme Court, AEL argued that it should be eligible to claim the 80% exemption so long as it satisfied the substance conditions prescribed under the law, regardless of whether deriving interest income formed part of its core activities.

In its judgement, the Supreme Court has allowed the appeal of AEL against the ARC and confirmed that the company is entitled to claim the 80% partial exemption on interest income. This judgement is a welcome one as it will set a legal precedent that will provide comfort and certainty to economic operators, and particularly companies in the global business sector, who were unsure of their eligibility to the partial exemption on interest income.