Mauritian Government Increases VAT Rate

by Amanda Banks, Tax-News.com, London

19 June 2002

In his recent Budget, Mauritius' Finance Minister, Paul Berenger increased the jurisdiction's VAT rate by three percentage points in order to rein in the budget deficit, which currently stands at around 6% of GDP.

Tax experts have predicted that the increase from 12% to 15% - the second since last summer- will bring in around $66 million in additional revenue, which the government hopes will reduce the budget deficit to around 3% by fiscal 2005/06.

According to reports earlier this week, however, the tax hike will also go towards funding sustantial spending initiatives in areas such as education, information technology development, the environment, the Mauritian infrastructure, and housing.

However, the budget has not been well received by the local media. In a report published immediately after M. Berenger's Budget announcement, Le Mauricien claimed that: 'This budget provides virtually no incentives to motivate local investment and attract foreign direct investment.'

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