Investment In Construction Pays Dividends In Mauritius

by Ulrika Lomas, Tax-News.com, Brussels

25 February 2009

Determined to uphold Mauritius’s reputation as an international financial hub and ideal business location for foreign investors, the government’s drive to support the construction industry, and to extend incentives for foreign investors, has paid dividends – property sales of luxury villas offering first-class facilities and amenities, are booming.

Endeavouring to mitigate the effects of the global economic crisis on its construction industry, the Mauritian government is working alongside the Committee on Resilience to implement measures to ensure that hotel construction and Integrated Resort Scheme (IRS) and Real Estate Scheme (RES) projects are completed. A series of initiatives unveiled in the government’s fiscal stimulus package in December, will also serve to boost the industry.

The IRS scheme is an investment project – worth around MUR15bn (USD450m) over the course of the next two years – for the construction and sale of luxury villas to attract high net-worth foreigners. Under the scheme, non-citizens acquiring a villa may be granted resident status, therefore benefiting from substantial fiscal advantages, such as low income tax and no capital gains or inheritance tax.

Under the Real Estate Scheme, the Board of Investment has also given a spur to investment, where ten projects, worth in the region of MUR4.8bn, will enable the construction of 1,900 residential units and ancillary facilities over the course of 2009 and 2010.

Key measures designed to boost construction contained in the government’s MUR10.4bn fiscal stimulus package include:

• Removing the requirement that land should have been purchased five years in advance before being used for development under the RES.
• Allowing the acquisition of a residential property under either the Integrated Resort Scheme or the Real Estate Scheme to be made in any hard convertible currency – previously payment was to be made only in US dollars, euros, or GB sterling.
• Enabling all IRS villas to be subject to the minimum duty of USD70,000 until December 31, 2010.
• Reducing duty levied on iron bars in coils, imported by registered contractors, from 15% to 7.5% from January 1, 2009.
• Suspending payments of land transfer tax and registration duty from January 1, 2009 until December 31, 2010, for approved projects.
• Enabling land transfer tax to be deducted from income tax.

Evidence that the property market is successfully weathering the financial storm – thanks to government efforts – is clearly visible.

• At luxury residential golf estate Villas Valriche, over 90% of the 132 properties in Phase One have already been sold.
• In the first phase of the property project ‘les Allées d’Helvétia’, in Moka, officially launched only last week, 50% of the most expensive properties have already been purchased. Two additional phases are due to follow in August, 2010.

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