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Mauritius: Budget Brief 2019-2020

Contributed by Bizcorp Experts
14 June, 2019


Embracing A Brighter Future Together As A Nation

The budget speech was delivered by the prime minister on Monday 10 June 2019.

Monetary figures:

  • Budget deficit of Mur 16.9 billion
  • A forecast real GDP growth rate of 4% is expected by June 2020
  • Budget deficit as percentage of GDP is forecast to be 3.2%

Some key measures of the budget are highlighted as follows:

Financial services:

  • New framework for fund administration and fund management
  • FSC entering into an agreement with the Gujarat International Finance Tec-City to recognize Mauritian licensed funds and management companies as qualified to operate in the Gujarat jurisdiction
  • New rules and an attractive tax regime to promote the development of Reak Estate Investment Trusts
  • An 'umbrella licence' for wealth management activities
  • A scheme for headquartering of 'e-commerce'activities
  • A framework for Green Finance in line with the 'Marrakech Pledge' – a continental coalition of African Capital Markets Regulators and Exchanges committed to foster green financing on the continent
  • A new trading platform at the Stock Exchange of Mauritius to allow medium sized profitable enterprises that do not qualify for listing on the official and DEM markets to raise capital and trade their shares
  • Introduction of a Business Facilitation Bill which will amend 26 pieces of legislation. These amendments will, among others expedite the start of businesses, eliminate unnecessary licences & permits, expedite clearances at the port & airport and align with international best practices regarding protection of minority investors and sharing of information
  • Establishment of a regime for Robotics and AI enabled financial advisory services
  • New licence for Fintech Service providers and encouraging self-regulation for Fintech activities.
  • Upgrade the Regulatory Sandbox Licensing framework for Fintech activities to be led by the Economic Development Board in consultation with the UN Office on Drugs and Crime
  • Crowd-funding will become a new licensable activity
  • FSC will Introduce e-signatures and elicences on a pilot basis
  • Setting up of a scheme for the head quartering of e-commerce activities

African Opportunities:

  • Building on the agreement with Mozambique towards the setting-up of a regional value chain for Liquefied Natural Gas (LNG)0
  • Development of a Textile City in Moramanga, Madagascar; on 80 hectares of land to be allocated to Mauritius by the Malagasy Government
  • Development of projects to take advantage of the Industrial and Technology Park in Naivasha, Kenya
  • Consolidation of the ongoing initiatives of Mauritius in the Special Economic Zones in Senegal, Cote d'Ivoire and Ghana
  • Project financng for Mauritian enterprises looking at expanding in Africa. Mauritius-Africa Fund will further expand its strategic partnerships with Pan-African and international multilateral development financial institutions; namely the Trade and Development Bank,AFREXIM Bank and Fonds de Solidarité Africain

Fiscal measures:

TAX HOLIDAYS

  • A five year tax holiday will be introduced for Mauritian companies collaborating with the Mauritius Africa Fund with respect to investment in the development of infrastructure in the Special Economic Zones
  • Income derived from smart parking solutions and other green initiatives will be eligible for a five year tax holiday
  • A newly set-up company involved in innovation-driven activities benefits from a tax holiday of 8 years on income derived from its intellectual property assets developed in Mauritius. Existing companies will, henceforth, benefit from the 8 year income tax holiday on income derived from intellectual property assets developed in Mauritius after 10 June 2019
  • A 5 year tax holiday will be introduced for a company setting up an e-commerce platform provided the company is incorporated in Mauritius before 30 June 2025
  • A 5-year tax holiday will be granted to a Peer-to-Peer lending operator provided the company starts its operation prior to 31 December 2020
  • 4 year tax holiday granted on income derived from bunkering of low sulphur heavy fuel oil

PARTIAL EXEMPTION REGIME

  • The 80% partial exemption regime applicable to Global Business Companies will be extended to all companies in Mauritius, excluding banks

The Income Tax Regulations 1996 will be amended to:

  • Define the detailed substance requirements that must be met in order for a taxpayer to enjoy the partial exemption benefit
  • Lay down the conditions that must be satisfied where a company outsources its core income generating activities, namely: (a) the company must be able to demonstrate adequate monitoring of the outsourced activities, (b) the outsourced activities must be conducted in Mauritius and (c) the economic substance of service providers must not be counted multiple times by multiple companies when evidencing their own substance in Mauritius

ANTI ABUSE RULE

  • Controlled Foreign Company (CFC) rules will be introduced

ACCELERATED DEPRECIATION

  • Accelerated depreciation threshold raised from Rs30,000 to Rs60,000 for capital expenditure incurred on plant and machinery

PERSONAL INCOME TAX EXEMPTION THRESHOLD

  1. Individual with no dependent: Now at MUR 310,000
  2. Individual with one dependent: Now at MUR 420,000
  3. Individual with two dependents: Now at MUR 500,000
  4. Individual with three dependents: Now at MUR 550,000
  5. Individual with four or more dependents:Now at MUR 600,000
  6. Retired/disabled person with no dependent: Now at MUR 360,000
  7. Retired/disabled person with dependents: Now at MUR 470,000

FREEPORT REGIME

  • Freeport operators or private freeport developers engaged in the manufacture of goods will be liable to tax at the rate of 3% from sale of goods on local market.
  • Existing manufacturing companies with a freeport certificate will have to meet additional substance criterias:
    • Employ minimum of 5 employees
    • Incur annual expenditure exceeding Rs3.5m
  • Freeport operators liable to Corporate Social Responsibility ("CSR") on local sales.

INCOME TAX ON WINNINGS

  • Any amount above MUR100,000 derived from Mauritius National Lottery and Government Lotteries will be subject to a final withholding tax of 10%;
  • The above tax rate will also be applicable on winnings above MUR100,000 in casinos and gaming houses.
  • A return of information including the name, address and National Identity Number of the winners of amount in excess of MUR100,000 will have to be submitted to the MRA by Casinos, Gaming Houses and bookmakers

For more information about the budget, please browse to the following http://budget.mof.govmu.org/



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