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Mauritius Unveils 2012 Budget

by Ulrika Lomas,, Brussels

09 November 2011

Mauritian Finance Minister Xavier-Luc Duval has recently unveiled details of the government’s 2012 finance bill, designed to promote export and market development, and to open up the country’s economy, and providing for tax measures intended to boost growth and investment and to promote social justice.

In his address, Duval explained that the 2012 budget is based on a conservative growth rate of 4%, in view of uncertainties surrounding the global economy, and noted that the budget is expected to increase fiscal revenues by around MUR76.9bn (USD2.7bn), of which MUR16.4bn would be derived from income taxes, MUR44.4bn from indirect taxes and a further MUR3.4bn derived from grants and other budget support.

The budget deficit for 2012 is forecast to stand at 3.8% of gross domestic product (GDP), the minister revealed, while emphasizing that this figure is significantly lower than the 5.1% deficit inherited from the previous government.

Alluding to key tax changes contained in the bill and designed to enhance economic growth, the finance minister noted government plans to raise, lower and even abolish some taxes.

According to Duval, Mauritius’s 2012 budget bill provides crucially for a MUR15,000 increase in the income tax exemption threshold for each of the six categories of income tax payers in Mauritius, as well as for the abolition of the solidarity tax imposed on dividends and interest from January 1, 2012.

Other measures contained in the government’s bill, outlined by the minister, include plans to abolish capital gains tax levied on immovable property with immediate effect, and to remove the municipal tenants' tax from January 1, 2012.

The Mauritian finance minister also highlighted government plans to remove land transfer tax on the sale of immovable property by financial institutions relating to debt recovery, and to ensure that hoteliers and tourist residences only pay the environment protection fee in 2012 provided that they are profitable. The tax holiday of Freeport operators, due to end in 2013, is to be extended indefinitely, the minister added.

Within the framework of the 2012 budget, the government has also decided to appoint two ambassadors for Africa and the Indian Ocean to widen the network of double taxation agreements with African states, starting with Algeria, Angola, Burkina Faso, Tanzania, and South Sudan, Duval pointed out.

In his address, the minister outlined government plans to strengthen and to simplify the existing tax administration and regulatory framework for financial services, and plans to employ an additional 50 tax inspectors within the Mauritius Revenue Authority as part of increased efforts to strengthen enforcement and to clamp down on tax evasion.

Determined to boost purchasing power of individuals, the government aims to abolish the 15% duty on perfumes, and other cosmetic items, thereby increasing duty-free imports by a further 80 tariff lines, the minister concluded.

TAGS: individuals | capital gains tax (CGT) | environment | tax | investment | Burkina Faso | India | Mauritius | interest | real-estate | budget | Algeria | Angola | Sudan | enforcement | agreements | dividends | individual income tax | Tanzania | services

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