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Tax Incentives Announced In Mauritius Budget

by Ulrika Lomas,, Brussels

14 June 2017

The Government of Mauritius has announced a series of tax incentives including a three percent concessionary tax rate for export-focused firms as part of a Budget, which seeks to improve the jurisdictions standing as a business hub.

A reduced corporate tax rate of three percent will, as from next financial year, be applied on the profits derived by any company from exportation of goods, Pravind Kumar Jugnauth, Prime Minister and Minister of Finance, announced in his 2017/18 Budget speech.

Jugnauth also announced an eight-year tax holiday for companies engaged in the manufacture of pharmaceutical products, medical devices, and high-tech products. This will apply to companies that incorporated in Mauritius after June 8, 2017. In addition, qualifying hi-tech manufacturing activities will be granted an exemption from registration duty and land transfer tax on the transfer of a building or of land for construction of a building.

Companies using deep ocean water in air conditioning installations, facilities, and services also qualify for the tax holiday, as well as for a double deduction for expenditures incurred in deep ocean water air conditioning (for a period of five years), and for costs incurred in the acquisition and setting up of a water desalination plant.

Under a new research and development tax incentive scheme, a company investing or spending on innovation, improvement, or development of a process, product, or service will be eligible for accelerated depreciation of 50 percent in respect of capital expenditure incurred on R&D, and a double deduction in respect of qualifying expenditure on R&D directly related to the entity's trade or business, provided the R&D is carried out in Mauritius.

This double deduction will be granted up to the income year 2021-2022 and qualifying expenditures include staff costs, consumable items, computer software directly used in R&D, and subcontracted R&D. Where such expenditures are not related to an entity's existing trade or business they will be allowed as an expense, provided the R&D is carried out in Mauritius.

A number of personal income tax measures were also announced, including tax reductions for low-paid workers through the introduction of a negative income tax for those earning less than MUR9,900 (USD216) per month, and the raising of the threshold at which income becomes taxable.

However, under a new "solidarity levy," any resident individual having annual chargeable income plus dividends in excess of MUR3.5m will be required to pay five percent on that excess. Interest income is not included in the computation of the solidarity levy.

TAGS: tax | business | Mauritius | tax incentives | manufacturing | dividends | construction | trade | services | research and development

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