Adansonia Mauritius – Mauritius Budget Brief 2023-2024

“TO DARE & TO CARE”

The Budget speech 2023-2024 was presented on the 02^nd of June 2023 by the Minister of Finance, Economic Planning and Development, Hon. R Padayachy who announced that the economy exceeded it’s GDP growth forecast for 2022 which stood at 8.7% and is committed to secure GDP growth at 8% for the forthcoming fiscal year. Tax reforms remained the focal point of this year’s budget.

We set out salient details of the Budget below:

Taxation / Benefits / Applicable changes for Individuals

• Taxation

a.  Effective from 01 July 2023, Individuals will be taxed under a progressive tax system as follows:

b.  Residents will benefit from an increased income exemption threshold of MUR 390,000.

c.  Solidarity Levy imposed on individuals earning a leviable income greater than MUR 3m is being completely abolished.

d.  Dividends earned from Mauritian resident entities will be fully exempt since they will no longer add up to the leviable income for solidarity levy calculations.

• Other Benefits / Applicable Changes

a.  The minimum salary ceiling currently standing at MUR 12,075 is being increased to MUR 15,000, effective from 01 July 2023.

b.  Negative excise duty scheme of 10% for the purchase of electric vehicles, up to a maximum of MUR 200,000 extended up to 30 June 2024.

Taxation / Benefits / Applicable changes for Corporates

• Corporate Tax

a.  Companies manufacturing medical devices will be taxed at 3%;

b.  Partial Exemption in respect of interest earned by Collective Investment Schemes (CIS) or Closed End Funds will be increased from 80% to 95%.

c.  Interest income derived from bonds, debentures or sukuks issued by an overseas entity to finance an approved renewable energy project (Green bonds) will be exempted.

d.  A 15% Investment Tax Credit (“ITC”) granted to manufacturing companies in respect of expenditure incurred on new plant and machinery (excluding motor cars) for a 3-year period is being extended up to financial year 2025/2026.

e.  Any unrelieved ITC may be carried forward for a period of 10 years.

f.  Double deduction granted in respect of expenditure incurred on market research and product development by manufacturing company will no longer be restricted to the African market. However, companies having an annual turnover not exceeding- MUR 500m will not benefit from this relief.

g.  All outstanding debts of the Covid-19 levy as at 20 January 2023 inclusive of penalties and interest will be waived.

• Protected Cell Company (“PCC”) and Variable Capital Company (“VCC”)

a.  The Mauritius Revenue Authority (“MRA”) will not recover tax owed by a cell of a PCC by having recourse to assets of other cells or non-cellular assets of the PCC.

b. Likewise, each sub fund or special purpose vehicle of a VCC will be treated as a separate entity for the purpose of recovery of tax.

• Tax Deduction at Source (“TDS”)

a.  TDS will not apply on fees paid to a Management Company and to an Investment Adviser licensed by the Financial Services Commission.

b.  The scope of TDS will be broadened to include 5% on Interior decorator/Designer fees and 3% on the payment of fees made by insurance companies to panel beaters and spraypainters for repairs or motor vehicles of policy holders.

• Value Added Tax (“VAT”)

a.  A person who has voluntarily registered for VAT purposes will be allowed to take credit for input tax as from the date of his registration.

b.  The time period to issue VAT assessment will not exceed 4 years following the period in which the tax liability arose, unless there is a fraudulent conduct.

Immigration

• The salary threshold for professionals applying for an occupation permit will be reduced to MUR 30,000.

• Business visa of 120 days will be granted to an occupation permit applicant without having to leave Mauritius.

• Application for Work Permits will now be allowed for non-citizens present in Mauritius under a tourist or business visa.

• Approval of work permit will be deemed to have been granted upon the issuance of an electronic work permit certificate if no response has been received from the Ministry of Labour, Human Resource Development and Training within 4 weeks of the date of application.

Property Acquisition in Mauritius

• Amendment will be brought to The Immigration Act to grant a residence permit to a retired non-citizen and his family on the acquisition of a property in a PDS project relating to senior living provided that:

a.  The acquisition price exceeds USD 200,000; and

b.  The non-citizen is aged above 50 years old.

• The status of resident shall remain valid as long as the buyer retains the property, and this amendment shall be backdated to the 27^th of April 2019, i.e. the date the Property Development Scheme was amended to include construction of purpose-built building or bringing an existing building under the Scheme targeting senior citizens.

• A resident non-citizen is now allowed, upon application, to acquire residential property of a minimum of USD 500,000 (previously USD 350,000) outside of existing schemes subject to the payment of an additional registration duty of 10%.

• Only 1 property may be acquired by the main holder of a resident permit and not his/her spouse or children.

Other Key Admentments

• The Banking Act will be amended to replace the term “Repo Rate” by “Key Rate” in the context of the implementation of the new monetary policy framework by the Bank of Mauritius.

• The reinforcement of the Mauritian AML/CFT framework is expected with a forthcoming new set of legislative amendments.