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Mauritius Unveils 2004-05 Budget

by Lorys Charalambous, for LawAndTax-News.com, Cyprus

15 June 2004

Following the recent delivery of the 2004-05 Mauritian budget by Deputy Prime Minister and Minister of Finance and Economic Development, the Hon. Pravind Jugnauth, accounting firm PricewaterhouseCoopers has released an analysis of the measures unveiled in the budget speech.

Key tax changes for individuals included a new requirement for all professionals earning more than Rs100,000 and all traders earning in excess of Rs400,000 in a CPS period to register with the Income Tax Department and submit CPS and tax returns whether they have any tax to pay or not. This represents a reduction in the threshold of Rs200,000 and Rs100,000 respectively.

For companies, the Finance Minister announced that certain tax incentives will not be available where books and records are not properly kept, and additionally revealed that an "Alternative Minimum Tax" will be payable by companies which distribute dividends but do not pay tax. The AMT will be calculated at 5% of book profits or 10% of dividends paid out, whichever is the lower.

Mr Jugnauth also revealed that customs duty on a number of items is set to be abolished or reduced.

Commenting on the budget in a statement, PwC observed that:

"There are no new business incentives and few growth-inducing measures likely to stimulate investment and job creation, outside SMEs. Agriculture and Training did get special attention but Industry, ICT and Financial Services were barely mentioned."

"The 20 Euros visitor tax will clearly not help the tourism sector, coming on the heels of airfare increases. Corporate Tax proposals on dividends will more likely penalize companies drawing large investment allowances precisely because they invest substantially – which may be self-defeating."

"Individual Income Tax changes will be popular with most taxpayers but will unfairly hit the country's salaried senior executives and other high achievers who do not draw tax-free dividends. This is also the first individual tax hike in decades and this may raise fears of the beginning of a fiscal about turn. The campement tax review will likewise create uneasiness and long-term uncertainty."

However, the firm concluded that:

"On balance, though, the Budget was a reasonably responsible attempt to project the image of a more 'caring government' after years of national belt-tightening, without causing too much hardship to the productive sector. In that, the Finance Minister may well have delivered what was generally expected from him by the average Mauritian, without leaving too many hard feelings around."

The full text of the 2004-05 Mauritian Budget Speech can be found in the Tax News Resources section

 

 






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