Mauritian Exporters Seek Tax Incentives

by Ulrika Lomas, Tax-News.com, Brussels

14 October 2011

Hot on the heels of the Mauritius Employers’ Federation (MEF), the Mauritius Export Association (MEXA) has now also submitted its pre-budget memorandum to Mauritian Finance Minister Xavier-Luc Duval, in which it underlines the need to introduce fiscal incentives for investment and training in the sector to improve productivity.

Underscoring the fact that the country’s export manufacturing industry is currently experiencing the impact of the global economic and financial crisis, and underlining its concerns regarding the situation in the country’s two main markets for manufacturing exports, namely the European Union and the US, the association calls in its memorandum for urgent government assistance, particularly in the jewellery and watch making industries. It also calls for government support for the seafood industry.

Warning that investment is currently at a very low level, noting an 87% drop between 2009 and 2010, the association states in its memorandum that this downward trend would undoubtedly jeopardize the effectiveness and productivity of the sector.

In view of its many concerns, the association therefore puts forward a raft of proposals, intended to improve the business climate and to strengthen productivity.

Key proposals outlined in the memorandum include calls for certain stimulus measures, introduced under the Economic Restructuring and Competitiveness Programme (ERCP), to be extended beyond December 2011, and for the reintroduction of both the 25% investment tax allowance for development costs over five years, and support measures for technological development.

The MEXA also urges the government to create a research and development institute specifically for the export sector, to simplify procedures and costs associated with the hiring of foreign workers, to accord fiscal reductions to facilitate corporate mergers and acquisitions, and to abolish value-added tax (VAT) on certain items used in the treatment of sea produce.

The Mauritius Employers’ Federation (MEF) also recently submitted its pre-budget wish list to Finance Minister Duval, aimed at addressing a number of domestic constraints on businesses in Mauritius and at improving efficiency, productivity and competitiveness.

It proposed that the 2012 budget gives due consideration to business facilitation, to employment, to small- and medium-sized enterprises (SMEs), to existing labour laws, to training and to corporate social responsibility.

Alluding to the different types of taxes, and wide array of levies, charges, fees and contributions that businesses have to pay with regards to permits and licences and in complying with the administrative requirements of a number of regulations, the MEF underlined the need to accelerate reforms for improving the investment climate and reducing the costs of doing business in Mauritius.

It therefore advocated in its memorandum that a joint public-private sector group be set up with a view to simplifying cumbersome bureaucratic processes and eliminating red tape that undermines competitiveness.

In addition, it recommended that the range of payments affected by enterprises be reassessed through consultation.

Other key proposals outlined by the federation included the recommendation that the 1% levy contribution by employers going to the Workfare Programme (which aims to provide on-the-job training to the unemployed and to individuals affected by the restructuring of the economy) be either eliminated or suspended, and that the training levy is reduced from 1% to 0.5%.

The Mauritian finance minister is due to present the budget on November 4.

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