8/8/2019 Taxand Mauritius Budget Brief 2011
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Budget Highlights
19 Nov 2010
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CONTENTS
Page
Foreword 3
Fiscal Measures 4
Tax Administration 7
Other Measures 7
Selected Economic Indicators 10
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FOREWORD
The Honourable vice Prime Minister, Minister of Finance and EconomicDevelopment, Pravind Kumar Jugnauth, presented his first budget, of the current government, for the fiscal and calendar 2011, in the midstof the euro-zone crisis which has a direct and menacing impact on theexport sectors of the economy. The main thrusts of his budget are (i)rebalancing growth, (ii) making a great leap forward on productivity and(iii) consolidating social justice.
The measures announced under the first theme is about maximizing theemerging opportunities from the new global infrastructure, that is,
reducing dependence on the euro-zone countries whilst moving up to
higher value added activities. These activities include the tourism sectorcoupled with duty free shopping, strengthening the transformation of the sugar cane industry, giving a spur to information communicationtechnologies/business process outsourcing, as well as the financialservices sector. New pillars that are being looked at are the creation of knowledge and medical hub as well as a creative industry. On the theme
of making a great leap forward on productivity, his focus emanates fromland, marine and human resources, doing business environment,dissemination of information, physical infrastructure as well as a publicsector reform. Initiatives for consolidating social integration are built
around eradicating absolute poverty a program of social housing,welfare of children from vulnerable groups as well as taking care of theelders.
Electoral promises have been maintained by abolishing tax on interestincome and the national residential property tax.
In his review of the budget outturn for 2010, the Minister noted anoverall budget deficit of 4.5% of GDP with public debt is expected toincrease from 50.9% at the end of 2009 to 52.5%. With the measuresin the budget deficit will be contained at 4.3%, whilst public sector debtwill be 60.3% next year despite fiscal measures, interalia, taxation of profit or gains on sale of land and immoveable property and taxation of exempt income for high income earners at the rate of 10%. Taxation
rate for both individual and companies has remained at 15%.
We trust that this Special Edition dedicated principally to the measuresannounced in the 2011 budget will be of interest to you. The full budget
speech may be accessed on the Ministry of Finance website onhttp://www.gov.mu/portal/goc/mofsite/files/BudgetSpeech2011.pdf.
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FISCAL MEASURES
Taxation of interest income
Interest income is being reinstated as exempt income with effect
from 1 January 2010
Tax withheld at source during 2010 will be refunded in the form of
tax credit on the 2012 and 2013 tax return
Gains on sale of land and immovable property
Gains on sales on land and immovable property, including
morcellements, will be taxed at the rate of 15%. Accordingly, the
surcharge of 5% on land transfer tax will be removed
A reduced rate of 10% from gains on sale of land and immovable
property will apply to individuals and they will also benefit from an
exemption on the first MUR 2 million of the gains. No tax will apply
to land and immovable properties when received by way of
inheritance
Taxation of Sociétés involved in real estate business
To be taxed in their own name instead of in the name of individual
partners at the rate of 15%.
Freeport Sector
Application of normal tax rate of 15% which was scheduled for 1 July
2011 has been extended by a further two years.
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Sugar Cane Industry
Reintroduction of the tax exemption on the first 60 tonnes of sugar
for small planters with less than 15 hectares of land and who rely
solely on sugar income. They will not be required to submit a tax
return
Abolishment of the 15% income tax on the surplus generated from
sugar operations by Cooperative Credit Societies.
Individual Taxation
Income tax exemption for lump-sum on retirement and severance
has been increased from MUR 1 million to MUR 1.5 million.
Solidarity Income Tax of 10% on exempt income introduced for
taxpayers with total income of more than MUR 2 million.
Taxpayers with total annual income of less than MUR 2 million and
investing in a home for the first time will be provided for a deduction
of up to MUR 120,000 on interests paid on mortgage loans taken as
from1 January 2011. This facility will be extended to the original
mortgage taken since 1st July 2006 by first time home owners.
Taxpayers with total annual income less than MUR 2 million and
whose children, up to a maximum of 3 children, are following a non-
sponsored full-time undergraduate at a recognized tertiary education
institution will be provide with the following additional exemption:
MUR 80,000 for 3 consecutive years of study per child
following courses in Mauritius
MUR 125,000 for 3 consecutive years of study per child
following courses overseas
National Residency Property Tax is being abolished
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VAT
VAT will be applied on cosmetic surgery provided by Private Health
Institutions
VAT will be charged on goods and services supplied by the Mauritius
Turf Club and horse stables, and on the management services to
tote operators.
Excise duties
The rate of excise duty on cigarettes and tobacco will be raised by
25%.
Excise duty on rum and liquor will be increased by MUR 100 per
litre. For all other alcoholic products a 20% increase in excise duty
will apply.
Excise duty on PET bottles, plastic bags and cans increased from
MUR 1 to MUR 2.
MID levy on each litre of petroleum products and each kg of coal and
LPG will be increased to 30 cents
The specific rates of excise duty on petroleum products will be
increased by 10%
Others
The license fees for casinos and Gaming House ‘A’ increases from
MUR 500,000 to MUR 3.5 million. Other increases in license fees are
as follows:
License fees for Gaming slot machines will be raised to MUR
125,000
For Gaming House ‘B;, the license fees will be raised to MUR
50,000
For horse-racing, all bookmakers will have to pay an increase
of 67% of their license fees
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License fees of all other betting outlets, including totalisators,
football betting outlets and bookmakers operating through
remote control communications, will be increased by 100%
For sweepstake organizers, local pool promoters, agents of
foreign pool and operators of dart games, the license fees will
by increased by 50%
Pool betting duty on foreign football matches will be increased from
10% to 12%
The rate of tax on fixed odds betting football matches and horse
racing will be raised from 8% to 10%
TAX ADMINISTRATION
Capital allowances that can be claimed on motor cars has been
limited to MUR 3 million per motor car
The due date for submission of returns and payment of taxes
electronically by individuals have been extended by 15 days
OTHER MEASURES
Financial Services Industry
Encouraging regional headquarters incorporation and activities in
Mauritius by allowing corporations holding Category 1 Global
Business Licence to extend their operations to the domestic
economy
Trust Act will be amended to apply the rule of perpetuity to allow
unlimited duration of non-charitable purpose trusts
New economic diplomacy initiative will be used to position Mauritius
as the preferred gateway into Africa
Advice will be taken from international experts on the merging of the
Bank of Mauritius (BOM) and the Financial Services Commission into
one single institution.
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Statutory amendments will be made to allow the BOM to:
Issue a larger variety of instruments for the management of
liquidity
Allow the BOM to lengthen the maximum period for the which
the BOM can grant advances from 3 months to 6 months
Broaden the list of collateral which the Bank may accept
Give wider powers to the BOM to develop the forex and
derivatives market
Bring the legal framework for the banking sector in line with
insolvency legislation
Improving the doing business environment
Threshold for the Board of Investment to issue Occupation Permits
for professionals will be lowered to MUR 45,000 per month.
An on-line submission and e-payment of notary deeds will be
implemented
Mauritius to be developed as an international arbitration centre
Commercial disputes, where applicable, will be settled within a time
frame of 100 days
A digital recording system will be installed in the hearing rooms of
the Employment Relations Tribunal to ensure timely delivery if
awards, orders and rulings.
Mauritius duty-free shopping paradise
Blueprint on the development of Mauritius as a duty-free shopping
paradise is being updated
The Board of Investment will set up a dedicated desk for promoting
the duty-free shopping as a new sector of the economy
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Mauritius as a knowledge hub
Mauritius to boost up the number of foreign students and the
following facilities will be granted to the foreign students:
A new Student Visa Scheme will be introduced
The students will be allowed to work on a part time basis
The Ministry of Tertiary Education will set up a specialized
unit for processing applications of foreign students,
scholarships and visas.
Every education institution will be required to set up a facility
assisting its foreign students to find an accommodation
The Board of Investment will handle the Occupation Permits for
academic staffs in institutions registered by the Tertiary Education
Commission irrespective of the salary level
Growing the medical hub
An Assisted Human Reproductive Technologies legislation will be
introduced to facilitate the development of in-vitro donor egg and
donor sperm treatment
A framework to facilitate investment in stem cells research and
treatment in Mauritius will be developed
Removal of customs duty on cosmetic products and pharmaceuticals
imported as samples for testing purposes in Mauritius
Finalization of the draft Bill on Human Tissue (Removal, Preservation
and Transplant)
Salary compensation
Salary (MUR) Compensation amountUp to 5,000 3.2%
5,001 – 12,000 MUR 175
12,001 – 30,000 MUR 190
>30,000 Nil
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SELECTED ECONIMIC INDICATORS
Main Economic Indicators
(Source: BOM, CSO)
(Source: BOM, CSO)
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Year 2007 2008 2009 2010
Budget Deficit FY, % GDP -4.3 -3.3 -3.1/-4.1
-4.5
GDP (market prices) (Rs Bn) 235.0 265.0 274.0 291.0
Total employment (No.) 523,700 543,000 524,800 531,000
Unemployment rate (%) 8.5 7.2 7.3 7.5
(Source: BOM, CSO)
Other Economic Indicators
(Source: BOM)
30 June 2007 2008 2009 2010
Balance on current account (RsBn)
-17.4 -22.2 -24.9 -22.6
Current account / GDP (%) -7.39 -8.39 -9.05 -7.76
Overall BOP (Rs Bn) +6.6 +9.1 +2.5 +9.7
Bank rate (%) 10.05 8.83 4.45 3.71
(Source: BOM)
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Exchange Rates
2007 2008 2009 2010
Exchange Rates- End of Period
Rupees per USD 32.3 26.6 33.35 30.92
Rupees per Euro 42.745 45.886 44.73 42.11
Rupees per GBP 57.972 47.036 50.62 49.55
Rupees per 100 Yen 26.03 36.168 34.00 37.27
(Source: BOM)
Non-Financial Indicators
Year 2007 2008 2009 2010
Population- Republic of Mauritius
1,260,403 1,268,565 1,275,032 1,280,925
Tourist arrivals 906,971 930,456 871,356 915,000
(Source: CSO, BOM)
CONTACTS
If you have any queries about the Budget 2011, or if you would like to discussits implications and planning opportunities please contact us.
Cim Tax Services LtdRogers House5 John Kennedy StreetPort Louis
Email: [email protected]
DISCLAIMER
This Budget Summary is a copyright of Cim Tax Services Ltd. No reader should act on the basis of any statement contained herein without seeking professional advice. Cim Tax Services Ltd and itsofficers expressly disclaim all and any liability to any person who has read this Budget Summary,or otherwise, in respect of anything, and of consequences of anything done, or omitted to bedone by any such person in reliance upon the contents of this Budget Summary.Readers are advised that the budget proposals are subject to amendments during the
parliamentary debates. Once the measures are adopted, Cim Tax Services will make available the updated and or consolidated versions of the relevant acts on its website.