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Mauritius Budget Consolidates

by Lorys Charalambous,, Cyprus

21 November 2012

During the presentation Duval stated that. "Our new comprehensive strategy on Africa is greatly appreciated both on the continent and globally. Never before has Mauritius been so dynamic and present on the continent."

An ongoing element of this stategy has been the signing of Double Taxation Avoidance Agreements (DTAAs) with other African nations. Duval announced. "We have signed DTAAs with Nigeria, Kenya, and the Republic of Congo, and we plan to sign five more next year."

An entirely new measure in the budget is the granting of Freeport status to companies wishing to carry out manufacturing for export to Africa only. It is hoped that this will help to attract global manufacturers wishing to take advantage of Mauritius's tax free access to regional markets in Africa. It is nevertheless acknowledged that key challenges remain in terms of air and sea access, people resources and skills if this is to be fully realised.

In terms of the financial services industry, which performed well in 2012 with a growth of 12.4%, the budget introduces tax exempt status for funds not benefiting from Double Tax Treaties or the Regional Treasury Centre concept. Furthermore, in an effort to promote higher value added activities, the Government intends to make commercial substance a pre-requisite for qualifying for a Tax Residency Certificate.

In view of the apparent success of recent tax amnesty schemes, tax revenue increased by 9.2% in 2012, the Government is proposing to re-introduce the schemes for another nine months with further improvements and refinements.

New measures to ease the burden of compliance for small enterprises were also announced, increasing the threshold for VAT registration to Rs4m.

Further tax measures included in the budget were:

  • Investments made during 2013 and 2014 in manufacturing and in "green" technology are to benefit from increased accelerated capital allowances
  • Alternative minimum tax (AMT) not to apply to manufacturing and hotel companies during fiscal years 2013 and 2014
  • Tax deduction at source (i.e., withholding) on interest payable to non-residents to increase to 15% (up from 10%)
  • Special bank levy rate to be continued for assessment years 2013 and 2014
  • Solidarity levy on telephony service providers extended for assessment year 2014
  • Companies allowed to carry forward excess "corporate social responsibility" (CSR) funds, instead of making payments to the Mauritius Revenue Authority, subject to certain conditions
  • Tax information exchange agreement to be signed with India
  • Interest received by individual taxpayers in respect of debentures quoted on stock exchange to be exempt from income tax
  • Enhanced value of benefit-in-kind for company cars and hotel accommodations
  • Expanded value added tax (VAT) refund program for agro- industrial and fisheries sector

TAGS: compliance | tax | value added tax (VAT) | tax compliance | India | Mauritius | tax incentives | interest | financial services | budget | offshore | manufacturing | tax rates | services

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