BEPS 2.0 and the New International Tax Landscape: What It Means for Mauritius in 2026

As we enter the new year, international taxation continues to undergo one of the most significant transformations in decades. BEPS 2.0 (Base Erosion and Profit Shifting), developed under the Organisation for Economic Co-operation and Development (OECD)/G20 Inclusive Framework, is reshaping how multinational enterprises (MNEs) are taxed in response to digitalisation, globalisation and increasingly mobile value chains.

For Mauritius, an economy built on cross-border investment, international trade and global structuring, these reforms are not theoretical. They directly affect business models, governance frameworks, tax risk management and talent requirements.

At the core of BEPS 2.0 are two interlinked pillars, supported by extensive OECD implementation guidance — including the recent OECD “Side-by-Side” package, which provides practical direction on how new rules interact with existing domestic tax systems.

Pillar One: Profits Follow Markets, Not Just Presence

Pillar One represents a major shift away from traditional tax concepts based solely on physical presence. It reallocates a portion of profits to market jurisdictions, allowing countries where customers or users are located to tax profits even where an MNE has no permanent establishment.

It primarily targets very large digital and consumer-facing groups and operates through:

• Amount A, which reallocates a share of residual profits to market jurisdictions, and
• Amount B, which simplifies transfer pricing outcomes for routine marketing and distribution activities.

Why This Matters for Mauritius

While Pillar One applies to a limited population of very large MNEs, its policy direction is critical for Mauritius. It signals a global move towards:

• Substance-based taxation
• Alignment between profits and value creation
• Reduced reliance on legal form alone

Mauritian entities operating as holding companies, regional headquarters, IP owners or service providers must ensure that decision-making, people and operational capabilities genuinely support the profits reported in Mauritius.

Pillar Two: The Global Minimum Tax and the End of Pure Rate Arbitrage

Pillar Two introduces a 15% global minimum effective tax rate through the Global Anti-Base Erosion (GloBE) rules. Where income is taxed below this threshold, top-up taxes may apply under mechanisms such as:

• The Income Inclusion Rule (IIR), and
• The Undertaxed Payments Rule (UTPR).

For a greater stability, simplicity and certainty, the OECD has issued the Side-by-Side package, which explains how Pillar Two rules should operate alongside existing domestic tax regimes, helping to reduce overlaps, inconsistencies and unintended double taxation. For further insights on the Side-by-Side Package, please Click Here.

Impact on Mauritius

Mauritius corporate tax rate already aligns with the 15% minimum, placing the jurisdiction in a relatively strong position. However, Pillar Two shifts the focus from headline rates to effective taxation, requiring closer examination of:

• Qualified Tax incentives and exemptions
• Substance-based outcomes
• Interaction with foreign parent-level top-up taxes

How Businesses Trading Internationally Should Adapt

BEPS 2.0 marks a transition from traditional tax planning to strategic tax risk management. Mauritian and international businesses should proactively:

• Reassess group structures for Pillar Two exposure
• Strengthen economic substance in Mauritius
• Enhance transfer pricing governance
• Invest in tax data, reporting and systems (enhanced tax technology)
• Anticipate more tax disputes

In this environment, tax technical expertise is a critical safeguard.

Building Capability for the BEPS 2.0

As BEPS 2.0 and its implementation packages take effect, the demand for highly skilled tax, legal and corporate professionals continue to grow. Understanding both Mauritius tax fundamentals and advanced international tax frameworks is now essential.

To support this evolving landscape, Finance & Tax Academy offers a comprehensive training portfolio, including:

• Fundamentals of Mauritius Taxation
• Intermediate International Taxation
• Advanced International Taxation
  (including BEPS 2.0, Pillar Two and Side-by-Side guidance)
• Regulatory & Corporate Training
  (governance, substance, compliance and best practice)

For more information, contact us at info@finance-tax.mu

Editorial Team

The Finance & Tax Academy