Finance Act 2018 update

Transcription

1 Finance Act 2018 update Individual, TDS & MRA Act Operational Services Dept. Dates: 23 & 24 August 2018

2 Rate of Income Tax for Individuals (Section 4 and First Schedule Income Tax Act ) o The rate of income tax applicable to individual shall be: Where his annual net income does not exceed Rs 650,000 10%; Where his annual net income exceeds Rs 650,000 15%; Commencement: Income Year 2018/19

3 New subsection (2) added to Section 4 of ITA Imposition of Tax 2. Where a non-resident individual derives income from Mauritius falling under section 10(1)(c), he shall pay income tax on the chargeable income attributable to that income at the rate specified in Part IV of the First Schedule. section 10 (1)..the gross income of an individual shall include - (c) Any rent, royalty, premium or other income derived from property

4 Details Rate of Income Tax for Individuals An individual resident in Mauritius deriving income from Mauritius. Rs (Example 1) An individual resident in Mauritius deriving income from Mauritius. Rs Emoluments 350, ,000 Net Rent 200, ,000 Annual net income 550, ,000 IET 305, ,000 Chargeable Income 245, ,000 Tax Rate 10% 15% Tax 24,500 66,750

5 Details Rate of Income Tax for Individuals (Example 2) An individual resident in Mauritius deriving income from Mauritius. Rs Emoluments 350, ,000 Net Rent 200, ,000 Annual net income 550, ,000 IET 305,000 - Chargeable Income 245, ,000 An individual not resident in Mauritius deriving income from Mauritius. Rs Tax Rate 10% 10% on x % on x Tax 24,500 35, ,000 = 65,000

6 Rate of Income Tax under PAYE (Section 96 and First Schedule Income Tax Act ) o The rate of tax for an employee under PAYE shall be: Where the average cumulative emoluments in a month does not exceed Rs 50,000 10%; Where the average cumulative emoluments in a month exceeds Rs 50,000 15%; Where emoluments consist exclusively of a fee paid by a company to its directors or by a statutory body to any member of its Board, Council, Commission or Committee - 15% Commencement: Income Year 2018/19

7 Rate of Income Tax (PAYE) Individuals (Example 1 Emol < Rs 50,000) EDF Submitted Rs 305,000 and Previous year EDF showed Rs 300,000 and is used for July PAYE. Employee derived Rs 49,000 during each month from July 2018 to June Total Emoluments for the month Add: Emoluments for previous months Description PAYE computation Month July August September October 49,000 49,000 49,000 49,000-49,000 98, ,000 Cumulative Emoluments up to current month 49,000 98, , ,000 Less: Cumulative Total Exemptions, Reliefs and deductions up to current month 23,077 46,570 70,064 93,558 Cumulative Chargeable Income Average Monthly Cumulative Emoluments 25,923 51,429 76, ,442 49,000 49,000 49,000 49,000 Tax Rate 15% 10% 10% 10% Cumulative PAYE up to current month Less: PAYE withheld for previous months PAYE for the current month 3,888 5,143 7,694 10,244-3,888 5,142 7,693 3,888 1,255 2,552 2,551

8 Rate of Income Tax (PAYE) Individuals (Example 2 Limit of 10% in Nov) EDF Submitted Rs 305,000; and Previous year EDF showed Rs 300,000 and is used for July PAYE. Employee derived Rs 49,000 during each month from July 2018 to October 2018, then Rs 55,000 in November 2018 to June Description PAYE computation Month July August September October November Total Emoluments for the month 49,000 49,000 49,000 49,000 55,000 Add: Emoluments for previous months - 49,000 98, , ,000 Cumulative Emoluments up to current month 49,000 98, , , ,000 Less: Cumulative Total Exemptions, Reliefs and deductions up to current month 23,077 46, ,064 93, ,051 Cumulative Chargeable Income Average Monthly Cumulative Emoluments 25,923 51,429 76, , ,949 49,000 49,000 49,000 49,000 50,200 Tax Rate 15% 10% 10% 10% 15% Cumulative PAYE up to current month 3,888 5,143 7,694 10,244 20,092 Less: PAYE withheld for previous months - 3,888 5,142 7,693 10,244 PAYE for the current month 3,888 1,255 2,552 2,551 9,848 Adjusted PAYE for the current month (limited to 15% and rounddown) 3,888 1,254 2,551 2,551 8,250

9 Rate of Income Tax (PAYE) Individuals (Example 3 Emol drops to below Rs 50,000) EDF Submitted; Total Exemptions, Reliefs and deductions declared in EDF Rs 480,000.and Previous year EDF showed Rs 475,000,000 and is used for July PAYE. Employee derived Rs 40,000 + overtime Rs 12,000 during each month from July 2018 and August Then Rs 40,000 per month from September 2018 to June Description PAYE computation Month July August September October November Basic Salary + End of Year Bonus 40,000 40,000 40,000 40,000 40,000 Allowances 12,000 12, Total Emoluments for the month 52,000 52,000 40,000 40,000 40,000 Add: Emoluments for previous months - 52, , , ,000 Cumulative Emoluments up to current month 52, , , , ,000 Less: Cumulative Total Exemptions, Reliefs and deductions up to current month 36,538 73, , , ,359 Cumulative Chargeable Income 15,462 30,506 33,551 36,596 39,641 Average Monthly Cumulative Emoluments 52,000 52,000 48,000 46,000 44,800 Tax Rate 15% 15% 10% 10% 10% Cumulative PAYE up to current month 2,319 4,576 3,355 3,660 3,964 Less: PAYE withheld for previous months - 2,319 4,575 4,575 4,575 PAYE for the current month 2,319 2, Adjusted PAYE for the current month (rounddown) 2,319 2,

10 Rate of Income Tax under PAYE (Section 96 and First Schedule Income Tax Act ) o The rate of tax for an employee under PAYE shall be: S 96(2) - Where no EDF has been submitted and the emoluments paid in a month exceeds the exemption threshold (Rs 23,461 previously Rs 23,076) 15% Where an exempt person or a pensioner has made a request under Section 93(2) for income tax to be withheld from his emoluments, pension, annuity or similar payment, tax shall be withheld in the manner provided under s 96(2) i.e 15% Commencement: Income Year 2018/19

11 Expenditure incurred by artists (Section 18A Income Tax Act ) o A person who is a member of the Mauritius Society of Authors under Copyright Act, may opt to claim 50 % percent of the gross income as expenditure without producing any documentary evidence. o The option is not available where: The gross income is from literary work; Gross income constitutes of emoluments; Gross income exceeds Rs 500,000. Commencement: 09 August 2018

12 Income Exemption Threshold (Section 27 & Third Schedule Income Tax Act ) IET Category From To Rs Rs A No dependent 300, ,000 B One dependent 410, ,000 C Two dependents 475, ,000 D Three dependents 520, ,000 E Four dependents 550, ,000 F G Retired or disabled person with no dependent Retired or disabled person with one dependent 350, , , ,000 Commencement: Income Year 2018/19

13 Income Exemption Threshold Retired Person (Section 27 & Third Schedule Income Tax Act ) o Previously a retired person who has attained the age of 60 years before 01 July of the income year was entitled to IET category F or G only if he was not in receipt of any emoluments or business income. o Now a retired person who has attained the age of 60 years before 01 July of the income year is entitled to IET category F or G even if he derived emoluments provided such emoluments does not exceed Rs 50,000 in the income year. Commencement: Income Year 2018/19

14 Additional Exemption for child pursuing undergraduate course (Section 27(6A) & Third Schedule Income Tax Act ) o Specific provision now included under Section 27. Allowable in respect of a maximum of 3 dependent children; The person is entitled to IET in respect of the child. Course should be: non-sponsored; full-time; Undergraduate; At a recognised institution tertiary educational Commencement: Income Year 2018/19

15 Additional Exemption for child pursuing undergraduate course (Section 27(6A) & Third Schedule Income Tax Act ) o Amount allowable as Additional Exemption: Rs 135,000 or the amount of tuition fees paid up to a maximum of Rs 175,000 when studying in Mauritius; Rs 200,000 when studying outside Mauritius. Commencement: Income Year 2018/19

16 Solar Energy Investment Allowance (Section 27C Income Tax Act ) o Unrelieved amount of investments in a solar energy unit will be calculated after deducting the following: IET and Additional Exemption for children at university; Interest relief Relief for Medical or Health Insurance Premium Deduction for household employees. Commencement: 09 August 2018

17 Rainwater harvesting system investment allowance (Section 27E Income Tax Act ) o An individual who has invested in a rainwater harvesting system, shall be entitled to a deduction from his net income of the amount invested in that income year. o In the case of a couple, the relief may be taken by one spouse or divided equally for each spouse. o rainwater harvesting system (a) means a system to capture, filter and store rainwater; and (b) includes consultancy, design works, excavation works, gutters and specialised water tanks in relation to the setting up of a rainwater harvesting system; Commencement: Income Year 2018/19

18 Rainwater harvesting system investment allowance (Section 27E Income Tax Act ) o Unrelieved amount of investments may be carried forward to succeeding years and calculated after deducting the following: IET and Additional Exemption for children at university; Interest relief Relief for Medical or Health Insurance Premium Solar Energy Investment Allowance Deduction for household employees. Commencement: Income Year 2018/19

19 Employee Declaration Form (EDF) (Section 95 Income Tax Act ) o All IET, reliefs and deductions to which an employee is entitled may be claimed in an EDF and include the following: IET, Additional Exemption for children at university; Interest relief; Relief for Medical or Health Insurance Premium; Solar Energy Investment Allowance; and Deduction for household employees; and Rainwater harvesting system investment allowance. Commencement: 09 August 2018

20 Penalty on deductions over claimed in EDF (Section 95 Income Tax Act ) o Where the IET, Additional Exemption for children at university, reliefs and deductions claimed by an employee in his EDF is found to be unjustified or exceeds the amount to which he is entitled by 10% or more, a penalty is applicable. o The penalty shall not exceed 25% of the underpaid amount. Commencement: 09 August 2018

21 Tax Rate applicable for CPS (Section 108 Income Tax Act ) o The tax rate applicable on for purposes of Current Payment System (CPS) is 15 %. Commencement: 09 August 2018

22 o o Tax Deduction at Source (TDS) (Section 111A, 111B & Sixth Schedule Income Tax Act ) TDS on commission introduced. Applicable when it is payable by any person other than an individual. o Rate applicable is 3%. o o Commission includes any sum paid or payable to an agent in relation to a commercial transaction. TDS on fees, in lieu of director s fees repealed. Commencement: 09 August 2018

23 Tax Deduction at Source (TDS) (Section 111C & Sixth Schedule Income Tax Act ) o Rate of tax applicable on Rent revised: Rent payable to a resident 5% Rent payable to a non-resident 10% S 111C(5) Tax deducted from rent shall be deemed to be final amount of tax payable. Commencement: 09 August 2018

24 Tax on Winnings (Section 111O & 111P Income Tax Act ) o A tax of 10% is deductible by every operator on all winnings exceeding Rs 100,000 paid to a winner. o o o operator means the Mauritius National Lottery Operator, a casino, a hotel casino or a gaming house licensed under the Gambling Regulatory Authority Act; winnings means any amount paid out in money. Tax on winnings is NOT TDS and is NOT allowable as a credit in computing Income Tax when submitting an Income Tax return. Commencement: 1 st September 2018

25 Remittance of Tax on Winnings (Section 111Q Income Tax Act ) o Remittance of Tax on winnings should be effected together with a return to DG, MRA, within 20 days from the end of the month in which the tax was deducted. o o First return to be filed by 20 Oct 2018 in respect of winnings paid in September Nil return should be submitted where operator has not paid any winnings on which tax is deductible. Commencement: 1 st September 2018

26 o o o Penalties & Assessments of Tax on Winnings (Section 111R to 111T Income Tax Act ) Penalty for late submission of return; Rs 2,000 pm up to Rs 20,000 is applicable. Penalty and interest for late payment of 5% and 1% pm respectively are applicable. Assessments, objections and recovery of tax on winnings are applicable in accordance with the corresponding provisions for other tax types of the Income Tax Act.

27 Return of Tax on winnings BRN TAN Full name of entity:. MM YY Operator type:. PERIOD 1 Number of wins greater than 100,000 rupees 2 Amount of winnings 3 Tax on winnings (10% of amount at line 2) 4 Penalty late submission of return 5 Penalty late payment of tax 6 Interest late payment of tax

28 o o Statement of Winnings (Section 123E Income Tax Act ) Every licenced operator is required to submit a statement of winnings exceeding Rs 100,000 paid to any person. The statement is required to be submitted: together with the betting/gaming return (Section 115 GRA Act) by every casino, hotel casino, gaming house, bookmaker, totalisator, operator of Mauritius National Lottery and agent of a foreign pool operator. Commencement: 1 January 2019

29 Statement on Winnings (Section 123E Income Tax Act ) o The statement should include the following information in respect of all winners paid during the period covered by the return: his full name his NIC number or, passport number/ncid in case on non-mauritian Citizen; and the amount of winnings.

30 Statement of winnings BRN of the Company Name of the Company Period Telephone Number Mobile Number Insert BRN of the Company Here Insert name of the Company Here Insert period here - WK or Month or Quarter Insert Telephone Number Here Insert Mobile Number Here NIC Number of the Winner Amount of winnings Paid Rs Insert the winner's National Identity Number or in the case of non-citizen, his passport number or the identification number issued to him by the Passport and Immigration officer here Insert the amount of winnings paid here

31 Statement of assets and liabilities (Section 123C Income Tax Act ) o An individual who: in an income year, derives net income and exempt income exceeding Rs 15m; or owns assets, including spouse s and dependent children's assets, exceeds Rs 50m, is required to submit a statement of assets and liabilities together with his Income Tax return. o New condition added: Obligation removed where the individual has submitted an Income Tax return for the 5 preceding income years. Commencement: deemed to have come into operation on 1 st July 2018

32 Negative Income Tax (NIT) (Section 150A Income Tax Act ) o Conditions applicable for payment of NIT. citizen of Mauritius; work for a minimum of 24 hours during at least 3 days in a week; total monthly earnings not exceed Rs 20, 000; net income or that of spouse, excluding any dividend and interest, for the current year, not exceed Rs 390, 000; and the employee and his employer are both compliant with their contributions to the NPF/NSF as from the month in which the allowance is being claimed. Commencement: 01 July 2017

33 An individual deriving the following Basic Salary in a month Negative Income Tax (NIT) (Eleventh Schedule Income Tax Act ) Allowance (Rs) Less or equal to Rs 5,000 1,000 Above Rs 5,000 but less or equal to Rs 7, Above Rs 7,000 but less or equal to Rs 9, Above Rs 9,000 but less or equal to Rs 9, Above Rs 9,750 but less or equal to Rs 9, Commencement: 01 July 2017

34 Amendment to MRA Act Presented By: M. Sookoo Section Head Operational Services Dept. 24 August 2018

35 S 2 MRA Act definition of tax o Definition of tax amended to include contribution and levy to allow recovery actions under the MRA Act to apply to contributions and levy payable under the National pensions Act, National Savings Fund Act and the HRD Act. Commencement: 09 August 2018

36 S 19 lodging written representation with Committee o The person lodging a representation to ARC under ITA, VAT Act or GRA Act, shall pay 5% of the amount determined as specified in the notice of determination of an objection. o Where a person fails to pay the 5% and the Chairman is satisfied that failure to pay is due to reasonable cause, he may direct for the representation to be accepted. Commencement: 09 August 2018

37 Set off of taxes New section 21D added to MRA Act o Provisions made for set-off of tax paid in excess and owed for different taxes under a revenue law. Commencement: 09 August 2018

38 New section 21 E added to MRA Act Order of payment o Where a person has outstanding tax liability and makes payment which is less than the total amount of tax, penalty and interest due, the payment shall be applied in the following order: firstly, in payment of the tax due; secondly, in payment of penalty due; thirdly, the balance remaining shall be applied against late payment interest due o Where a person has tax liability for more than one tax, payment shall be allocated against the earliest liability first. Commencement: 09 August 2018

39 Collection and recovery of tax o Legal provisions for the Collection and recovery of tax under the various revenue laws now provided for under the MRA Act. o The enforcement tools are: S 21G - recovery of tax arrears from emoluments S21H - recovery of tax by attachment S21I - recovery of tax by distress and sale S21J - contrainte S21K - proceeding for temporary closure of business premises S21L - inscribed privilege S21M - uninscribed privilege S21N - security

40 No limitation of action for recovery of tax New section 21D added o No law relating to the limitation of action shall bar or affect any action or remedy for recovery of unpaid tax.

41 Mauritius Revenue Authority (MRA) Act S 28(14) amended o Expeditious Dispute Resolution Tax Scheme extended to cover tax assessments raised prior to 1 July 2016 instead of 1 July Commencement: 09 August 2018

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