The 2015/16 Mauritius budget, presented by the Minister of Finance on 23 March 2015, targets a growth rate of 5.3% for 2015/16. Such growth is to be driven by 13 mega projects, including eight “smart cities” and five “technopoles”, expansion of the port sector and the promotion of small and medium enterprises (SMEs) to create employment, expand Africa and regional partnerships and attract foreign-based Mauritian professionals.
Below we highlight some specific tax and economic proposals that may be of interest:
- A range of targeted incentives for SMEs registered in terms of the Small and Medium Enterprise Development Act after 1 June 2015 have been introduced, including:
- The VAT registration threshold has been increased from MUR4-million to MUR6-million, and the turnover threshold for submitting returns under the Advance Payment System (APS) has been increased from MUR4-million to MUR10-million.
- Plant and machinery used in the exploration and production of petroleum products are to be exempted from VAT.
- a new Petroleum Bill will be introduced shortly to provide the legal and fiscal framework for exploration and exploitation of hydro-carbon resources in the Mauritius Exclusive Economic Zone.
- The accelerated annual allowances available in respect of electronic and high-precision machinery, manufacturing plant and machinery, scientific research and industrial premises used for manufacturing are to be extended to 30 June 2018.
- The Freight Rebate Scheme will be extended to other ports in Africa and open to all shipping lines.
- Incentives for “green” investments include:
- extending the annual allowances in respect of green technology equipment, landscaping and other earthworks for embellishment purposes, introduced for the 2013 and 2014 years, on a permanent basis
- a tax deduction for the total amount of expenditure incurred on solar energy units by households
- VAT zero rating for chilled deep sea water used for the provision of air conditioning services
- an exemption from land conversion taxes on land put to use for renewable energy projects
Banks and telecommunications
- The special levy on banks will remain at 10% of chargeable income for Segment A activities, and 3.4% on book profit and 1% of operating income on Segment B activities, until 30 June 2018.
- The solidarity levy of 5% on the book profits and 1.5% on the gross receipts of telephone service providers, which was applicable up to 31 December 2014, is to be extended to 30 June 2018.
- Interest received by a non-resident company from debentures quoted on the stock exchange will be exempt from income tax.
Personal income tax
- In order to encourage the Mauritian diaspora to return to Mauritius, the following incentives have been announced in respect of professionals who have worked abroad for a minimum of 10 years:
- a 10-year tax exemption on worldwide income
- exemption from customs duties of up to MUR2-million on the purchase of a car in or outside of Mauritius, as well as on the relocation of other personal assets
Corporate social responsibility (CSR)
- The structure of the CSR system is to be revised and the CSR guidelines are to be removed, with companies now being able to decide on how best to fulfil their social responsibility by allocating 2% of their taxable profits according to their own set of priorities.
- Alternative Minimum Tax (AMT), currently levied where a company distributes dividends and its normal tax payable is lower than 7.5% of its adjusted book profit, was suspended for manufacturing companies and hotels for the 2013 and 2014 years. It is proposed that AMT should be removed for all sectors.
- The fiscal year is amended from 31 December to 30 June, to coincide with the government’s new financial year-end. As a result, individuals will be required to file a tax return for the six months ending 30 June 2015.
- The amount payable upon objection to an assessment is reduced from 30% to 10%, and the Expeditious Dispute Resolution of Tax Scheme (EDRTS) is to be renewed for another year for the Mauritius Revenue Authority (MRA) to consider any amount assessed for taxpayers who could not lodge an objection due to an inability to pay the required portion of tax assessed.
- The interest rate applicable to late payment of taxes is reduced from 1% per month, or part thereof, to 0.5% and certain penalties for the late submission of returns are also to be reduced.
- The statutory time limit of the MRA to issue an assessment is being reduced from four to three years.
- Ministries, government departments, local authorities, statutory bodies and the Rodrigues Regional Assembly are to withhold and remit a percentage of VAT on contracts exceeding MUR300 000 directly to the MRA in an effort to enhance compliance. The percentage to be withheld is still to be confirmed.
- Companies with an accounting year-end of 30 June will be granted the option of either filing their annual tax return by 31 December or paying tax for the last quarter by filing an additional APS return and settling the balance of tax and filing their annual return by 31 January of the following year.
- The government will introduce a special Financial Sector Incentive Scheme to attract international asset and fund managers to relocate their front-office operations in Mauritius.
- The Financial Services Promotion Agency will be reactivated for more effective promotion campaigns, especially to diversify and accompany the Global Business activities in Africa.
Expanding economic partnership with Africa
- The Mauritius Africa Fund will concentrate on the development of Special Economic Zones in various African countries. Three countries, namely Madagascar, Ghana and Senegal, have already expressed their intention to work with Mauritius on the above projects.
- It is intended that a regional shipping line to expand regional trade and enhance the role of Mauritian ports in the region will be set up.
- The Board of Investment will be posting eight trade and investment managers in Mauritian embassies in strategic cities around the world, including Beijing, Geneva, Pretoria, London, Moscow, Mumbai, New York and Paris.
Foreign real estate ownership
- The Integrated Resort Scheme and Real Estate Scheme, which give access to foreign ownership in real estate in Mauritius, will be revised with an aim to design a single scheme that will provide a wide range of opportunities for local and foreign individuals.
- The new scheme will be implemented through regulations issued under the Investment Promotion Act and new planning policy guidelines will also come in force.