Through this article, we would like to explain the treatment of foreign exchange differences under the Mauritian tax legislation and in accordance with the international accounting standards. We have also taken the opportunity to expose few interesting case laws from Australia and the United Kingdom with meaningful decisions having relevance in the Mauritian context in distinguishing capital from revenue account.

The tax treatment of foreign exchange gains and losses presents considerable problems for both taxpayers and the tax authority. For taxpayers, the most important problem in that context is uncertainty and to prevent the taxation of what they would describe as unreal profits. It is therefore vital to understand the intricacies of the foreign exchange differences and we hope this article will assist you in navigating the tax implications of foreign exchange transactions which may be a critical aspect of managing the financial health of a global business entity.

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