Lex Africa member CK (Corporate Services) comments on November 2011 Mauritius Budget
The Minister of Finance and Economic Development of Mauritius delivered his Budget speech on 4 November 2011.
The Budget aims to provide for innovative measures to support key economic sectors (such as ICT/BPO, Tourism and the Financial Sector) and new markets (including renewable energy) The Budget also provides for a National Resilience Plan to support the economy in the global economic downturn. With these measures, Mauritius should maintain its first ranking on the 2011 Mo Ibrahim Index of African Governance, its first ranking in Africa on the Fraser Institute’s Economic Freedom Index and its first ranking in Africa in the World Bank’s Ease of Doing Business study.
Highlights of the Budget which may be of interest for potential investors in Mauritius (whether in the local market, the offshore sector or the Freeport) are set out below.
Global Business
- Possibility for Global Business Companies to pay tax in Singapore dollars, South African rand, Swiss francs and any other approved convertible foreign currency (in addition to US dollars, Euros and GB pounds sterling). The same facility will be extended to domestic companies.
• Protected Cell Companies will pay tax on a cell basis.
• The Financial Services Commission (FCS) will be empowered to sign the Memorandum of Understanding of the International Organisation of Securities Commissions and amendments will be made to the Bank of Mauritius Act, Financial Services Act and Securities Act to allow the disclosure of information to the FSC.
• New legal frameworks will be set up to promote Foundations, Private Occupational Pensions and a new concept of Trusts.
• The Limited Partnerships Act will be amended so that the limited partnership can operate in or outside Mauritius or both in and outside Mauritius.
• the Government will take steps to safeguard the India/Mauritius Double Taxation Avoidance Agreement.
Logistics and Distribution
• the Tax holiday granted to Freeport operators (which would have ended in 2013) will now be carried forward indefinitely.
• A zero per cent corporate tax will (from 1 July 2013) provide more certainty to Freeport operators and enhance Mauritius as a regional trade, marketing and distribution platform. This measure will definitely give a strong boost to the sector and help to further increase cross border trade.
JCT/BPO
The Budget emphasises the development of the ICT/BPO industry as a key pillar of the Mauritian economy.
- To address shortages of manpower in the sector, foreigners earning a monthly salary of Rs30 000 will be eligible for an Occupation permit.
• Measures will be taken to assure better connectivity as well as better competition and competitive pricing of services.
Aviation Hub
Positioning Mauritius as an aviation Hub will improve its connectivity to Africa and Asia.
Air Mauritius will expand its network of partnerships with other airlines.
Tourism & IRS/RES
- Government intends to prioritise the hospitality and property development sector. Capital gains tax in respect of the sale of immovable property is abolished.
• To reposition Mauritius as an attractive sailing destination and promote diversity in its tourism package, the Budget provides for the setting up of an appropriate legal framework for marina development and operations.
Renewable Energy
- A framework will be set up to enable the production of ethanol for blending with gasoline. 318million MUR will be allocated to the Maurice Ile Durable (“MID”) initiative, consisting of 118million MUR for renewable energy, 100 MUR for solar water heaters and 100 MUR for the MID Fund. These measures form part of the Government’s vision for the MID initiative for sustainable development.
Tax Administration for corporate entities
It will be possible to offset excess corporate tax paid against future tax liabilities under the Advance Payment System.
