RSM (Mauritius) Budget Highlights 2018/19

RSM (Mauritius) Budget Highlights 2018/19

Personal Income Tax Income exemption threshold of all employees are increased by MUR 5,000, effective as from 1 st July 2018. Category From To Individual with no dependent 300,000 305,000 Individual with one dependent 410,000 415,000 Individual with two dependents 475,000 480,000 An individual having annual net income of up to Rs 650,000, will be taxed at the rate of 10% instead of 15%. The exemption threshold on the lump sum received as severance allowance, pension or retiring allowance will be raised from Rs 2 million to Rs 2.5 million. The Insurance Industry Compensation Fund will be exempted from income tax. Individual with three dependents 520,000 525,000 Individual with four or more dependents Retired/disabled person with no dependent Retired/disabled person with dependents 550,000 555,000 350,000 355,000 460,000 465,000

Corporate Tax The Freeport regime will be amended as follows: (i) the corporate tax exemption granted to freeport operators and private freeport developers on export of goods will be removed; (ii) Freeport operators and private freeport developers will continue to be exempted from the Corporate Social Responsibility (CSR) contribution; (iii) the current tax regime will continue to apply until 30th June 2021 to companies which have been issued with a freeport certificate before 14th June 2018. Introduction of a 5-year tax holiday for Mauritian companies collaborating with the Mauritius Africa Fund for the development of infrastructure in the Special Economic Zones. The tax holiday will cover investments in SEZ infrastructure development and will benefit two eligible categories of firms: project developers and project financing institutions. The Government will allow for a double deduction from tax, of the wage and salary costs of employees under the Work@Home Scheme for the first two years. As from January 2019, private firms will have to remit 75 percent of their CSR contribution to the MRA. However, for CSR programmes which have already started and which are in accordance with the guidelines set by the National CSR Foundation, firms will be allowed, upon approval by the Foundation, to retain an additional amount of up to 25 percent.

Corporate Tax An investment tax credit of 5% over 3 years will be granted in respect of expenditure in new plant and machinery (excluding motor cars) by a company importing goods in semi knocked-down form on the condition that at least 20% local value addition is incorporated therein. The credit will be available in respect of investment made up to 30th June 2020. The Category 2 global business regime will be abolished and the Income Tax Act provisions applicable to that regime will be reviewed accordingly. The Deemed Foreign Tax Credit regime available to companies holding a Category 1 Global Business Licence will be abolished as from 31st December 2018. A partial exemption regime will be introduced whereby 80% of specified income will be exempted from income tax. The exemption will be granted to all companies in Mauritius, except banks, and shall apply to the following income: (i) foreign source dividends and profits attributable to a foreign permanent establishment; (ii) interest and royalties; and (iii) income from provision of specified financial services.

Micro,Small and Medium sized Enterprises Development Bank of Mauritius will operate an Enterprise Modernisation Scheme aimed at providing finance lease facilities to MSMEs with turnover up to Rs 10 million to modernize their plant and equipment A VAT-registered person will henceforth not be required to pay VAT on import of machinery and equipment, if the amount payable is Rs 150,000 or more.

MISCELLANEOUS 5% Payment on Objection Currently, a person dissatisfied with a tax assessment made by the MRA and the Registrar-General s Department pays 10% of the amount assessed prior to lodging an objection. He will be required to pay an additional 5% if he is still not satisfied with a determination at objection and intends to appeal before the Assessment Review Committee. Return of Information Casinos, Gaming Houses and bookmakers/totalisators will be required to submit a return of information to the MRA on wins exceeding Rs 100,000 giving the name, address and National Identity Number of the winners. Tax Deduction at Source Tax Deduction at Source (TDS) will be extended to commission payment at the rate of 3%. In addition the TDS rate applied on rent paid to a non-resident will be increased from 5% to 10%. TDS will not apply to director fees.

RSM (Mauritius), a firm of Chartered Accountants in Mauritius, is a member firm of the RSM network. Each member of the RSM network is an independent accounting, tax and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction. This publication has been carefully prepared, but it has been written in general terms and should be seen as a broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. RSM (Mauritius), its partners and employees do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.