Budget 2018/2019 Our technical analysis and synopsis 15 June 2018 - EY
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Budget 2018/2019 Our technical analysis and synopsis 15 June 2018
1. Executive summary Pg 3
2. Personal income tax Pg 4
3. Corporate tax Pg 5
4. Tax administration Pg 9
5. Value Added Tax Pg 10
6. Budget outturn and estimates Pg 11
7. Background Pg 11
8. The 7 main strategies Pg 12
3 Budget 2018/2019 | June 2018
1. Executive Summary
This Budget Alert is based on the Budget Speech presented to
the National Assembly by the Prime Minister, Minister of Home
Affairs, External Communications and National Development
Unit and Minister of Finance and Economic Development, the
Honourable Pravind Kumar Jugnauth on 14 June 2018.
This is the fourth Budget of the Minister under the present regime.
It is a seven-pronged Budget which builds on the foundations
laid in the previous Budgets. A number of measures are aimed at
increasing the standard of living of fellow citizens and stimulating
the agricultural sector.
We welcome the various measures proposed to reform the financial
and banking services sector in line with the international tax
landscape. There would be major changes in the taxation regime of
banks.
The Work@Home scheme aims at raising productivity and
increasing gender equality in the labour workforce and should be
welcomed by the working population. The double tax deduction
on wage and salary costs will act as an incentive for domestic
companies to adopt this global concept. This measure is likely to
encourage more women to join the labour workforce.
The Minister did not raise the standard rate of Value Added Tax
(‘’VAT’’), but instead removed VAT on a number of products. The
reduction and removal of customs duty on a number of products
would also reduce the taxable value for VAT purposes where the
goods in question are standard rated.
We are disappointed once again that a group relief provision
was not introduced for income tax and VAT purposes although
a number of representations have been made. Combined with
the time limit on the utilisation of tax losses, this may lead to an
unnecessary fiscal cost for a group of companies. We already
have a group relief provision on intercompany transactions for
land transfer tax and registration duty purposes. In the current
economic conditions, a number of entities spanning a number of
sectors are engaged in cost cutting strategies and a number of
restructuring exercises are being made; such exercises are for bona
fide commercial reasons.
To conclude, this budget focuses on widening circles of
opportunities, encouraging consumption of local products,
rejuvenating the agricultural sector amongst others. Its success will
depend on the extent to which the measures are implemented and
applied bearing in mind their underlying objectives.
3 Budget 2018/2019 | June 2018
2. Personal income tax
Negative income tax supported by
national minimum wage
Employees with a monthly earnings of Rs 9,900 or less are entitled
to the Negative Income Tax (‘’NIT’’). The allowance would be based
on the monthly basic salary instead of total earnings as from 1 July
2019. However, an employee with a monthly total earnings over Rs
20,000 will not be eligible to NIT. The objective of the amendment
is to ensure that the NIT does not become a disincentive and at the
same time does not penalise employees performing overtime.
Some other conditions have been removed so that an employee
may be entitled to NIT. For example, he should not be required to be
a full-time employee, in so far as he works for at least 24 hours over
three days in a week. He will be eligible to the NIT as from the first
month of employment.
It is hoped that the measure will benefit society in the long run and
will have a catalyst effect for the individuals concerned.
Income exemption threshold (‘’IET’)
The basic Income Exemption Threshold has been increased by Rs
5,000 for all categories as depicted below:
Current Proposed
Rs
Individual with no dependent 300,000 305,000
Individual with one dependent 410,000 415,000
Individual with two dependents 475,000 480,000
Individual with three dependents 520,000 525,000
Individual with 4 or more dependents 550,000 555,000
Retired/disabled person with no dependent 350,000 355,000
Retired/disabled person with one
460,000 465,000
dependent
This measure will also impact on the exempt portion of the
retirement pension of Mauritian citizens living abroad. The
fact that the increase is based on a flat amount for all the IET
categories implies that the percentage increase will vary for each
categories.
Budget 2018/2019 | June 2018 4
Rates of income tax Income tax on Winnings
Individuals with yearly net income of Rs 650,000 will be taxed at a Tax would now be withheld on betting gains where such amount
rate of 10% instead of 15%. exceeding Rs 100,000 obtained from “Lotto”, “Loterie Verte”,
casinos and gaming houses.
This measure seeks to alleviate the tax burden for the middle
class people. Once the yearly net income exceeds Rs 650,000, This is a new measure for taxing gains. The relevant entities
the applicable tax rate would be 15% as the measure is not will be required to remit the tax withheld and submit an annual
an introduction of a progressive system of income tax. We statement to the Mauritius Revenue Authority (‘’MRA’’).
are disappointed to see that no amendment would be made
to the solidarity tax introduced last year for certain resident
individuals. It would appear that the measure applies to Statement of assets and liabilities
residents and non-residents and the nature of the income and its
source would not be relevant. The law will be amended so that the due date for the submission of
the statement of assets and liabilities (‘’SAL’’) is extended by one
year: the SAL would be submitted with the tax return for the year
Additional deduction for tertiary ending 30 June 2018 for the relevant individuals.
A further amendment would be made so that the SAL would not
education apply to an individual who has submitted his tax return during the
The additional income exemption threshold for individuals with last five years.
dependents pursuing an undergraduate course is being increased
from Rs 135,000 to Rs 175,000 where the undergraduate course The amendments are welcomed. However, the practical challenges
is pursued in Mauritius. Where the undergraduate course is and data security should be discussed and agreed with the MRA
pursued outside Mauritius, the threshold is being increased from Rs for individuals who would be required to submit the SAL.
135,000 to Rs 200,000.
The percentage increase is more than 25% and this measure
is consistent with the policy to increase the standard of living
3. Corporate tax
of Mauritius. We wish to emphasize that the individuals should
ensure that they keep the relevant evidence.
Deductions relating to staff members
Rainwater harvesting
working from home
An individual investing on rainwater harvesting system will be
allowed to deduct the total cost from his taxable income. Employers would be able to claim twice the amount of their wage
bills in relation to employees working under the work@home
This is a measure which would encourage Mauritians to adopt the scheme. Employers would also be eligible to an annual income
“Maurice Ile Durable” policy and would encourage self-sufficiency. tax credit (“ITC”) equivalent to 5% of the cost of investing in the
Whilst the measure is welcomed, time will tell if the tax incentive required IT systems. The ITC will be available for a maximum of
has been sufficient to encourage individuals to invest in a three years and is in addition to any annual allowances on such
rainwater harvesting system. assets. The Employment Rights Act will be amended to address the
legal aspect of this proposal.
This measure demonstrates the Government’s intention to
Interest relief under Islamic Finance promote the work at home philosophy. It appears that the
Arrangement status of the employer is not relevant so that it may apply to an
individual acting as an independent contractor. This philosophy is
The profit charge payable under Islamic Financing Arrangement for already in place in certain developed economies.
the construction of a house would now qualify for interest relief if
the arrangement is being secured on an immovable property. Whilst the ITC applies for a maximum of three years, the double
deduction for the wage bill would be restricted to the first 2
This measure extends the scope of the interest relief. The employment years. Employers should be able to demonstrate the
measure seeks to place all individuals who borrow for the time spent by the employees working at home to benefit from the
purposes of a construction project on a level playing field. above incentives: the legal arrangements between the employers
and the employees should also reflect the time spent by the
employees working at home.
Exemption on termination payment for We believe that a guideline should be issued to clarify on how
employees the time spent by the relevant employees should be determined
taking into consideration a number of economic factors.
The exemption threshold on lump sum paid to an individual as form
of severance allowance, pension or retiring allowance has been The speech does not specify the commencement date for this
raised from Rs 2,000,000 to Rs 2,500,000. measure and whether it would also apply to part-time and
seasonal employees. The interaction of this measure with the
The individuals in question would welcome this measure as the double deduction for Rodrigues-based employees and disabled
increase in the exempt portion is 25%. The effective tax savings employees, the employment cost may be relieved four times for
depend on a number of factors like the applicable IET and the tax purposes.
liability of the individual to the Solidarity Levy.
5 Budget 2018/2019 | June 2018
Cessation of the Category 2 Global
Business Licence (‘’GBL 2’’) regime
The Financial Services Commission (“FSC”) will cease to issue
Category 2 Global Business Licence as from 1 January 2019 and
a single Global Business Licence (“GBL”) will be issued by the FSC.
Companies holding a GBL2 Licence issued by the FSC prior to 16
October 2017 will be exempt from income tax until 30 June 2021.
It is further provided that the current income tax exemption for
companies holding a GBL2 Licence issued by the FSC on or after 16
October 2017 would be reviewed.
We believe that the amending laws should specify the basis for
computing any deductible expenses and annual allowances: it
would also be important to assess whether the Corporate Social
Responsibility (“CSR”) charge would apply for such companies.
Alignment of the taxation system for
companies holding Category 1 Global
Business Licences with domestic
companies
Companies holding a Category 1 Global Business Licence (“GBL1”)
under the Financial Services Act 2007 would no longer be able to
compute their foreign tax on the basis of the presumed foreign tax
amount. This measure would be effective as from 31 December
2018. A partial exemption regime will be introduced whereby 80%
of the specified income of Mauritian resident companies will be
exempt from tax: the specified income for this purpose includes the
following:
• Foreign dividends and profits attributable to foreign permanent
establishments;
• Interest and royalties; and
• Income from the provision of specified financial services.
In the event that the company holds a GBL 1, it will be required to
comply with pre-defined substantial activities so that its specified
income is exempt from tax. Where the partial exemption is not
available, the current credit system would continue to be applicable.
The effective date of 31 December 2018 implies that an
apportionment is required where the company does not have a
calendar year end.
It does not appear that companies currently holding a GBL1
will be required to make any CSR contributions. Moreover, the
income tax exemption on the payment of interests and royalties
to non-residents by companies holding a GBL1 still applies: the
exemption relating to interests on deposit and savings accounts
as well as trading profits on sale of securities would also apply. We
presume that amendments would have to be made to other laws
like the Companies Act and Value Added Tax Act as a result of the
change in the regulatory framework.
This measure aligns the taxation system for all Mauritian resident
companies and seeks to treat all residents on an equal footing.
The partial exemption regime provides for a unilateral exemption
of 80% for the specified income. Resident individuals may not be
able to claim such exemption on similar foreign income.
Budget 2018/2019 | June 2018 6
Clarity is required on the interaction of the partial exemption with
the credit system. We believe that a company should be able to
apply the credit system if this is to its advantage. For example, in
the context of Indian sourced dividend income, the Indian Dividend
Distribution Tax is enough to eliminate the Mauritian tax on the
Indian dividends.
Care is required in the application of the proposed partial
exemption so that it does not have unintended consequences.
Worked examples should be discussed and agreed with all
stakeholders to achieve certainty in the implementation of this
measure.
It is uncertain if the partial exemption would apply to domestic
interest and royalty income.
The additional substance requirement for companies holding a
GBL has not been published yet and we believe that any such
additional requirement should be in line with the OECD Action
point 5.
Reduced corporate tax rate of 3% for
companies engaged in global trading
activities
The corporate tax rate of 3% currently applicable on the profits
made on exports would be extended to global trading activities
effected by companies.
The amending laws should define the activities that would be
treated as global trading: it appears that international trading of
goods should fall within its scope.
The commencement date of this measure has not been specified.
Although companies would be subject to a corporate tax rate
of 3%, companies other than those holding a GBL would still be
required to make CSR contributions.
The interaction of this measure with the tax that arises in the
country of source should be understood. Where the underlying
activities are performed outside of Mauritius, the arm’s length test
should not apply in Mauritius and would be the subject matter of
the jurisdiction where the economic activities are performed.
Investment tax credit
Companies importing goods in semi-knocked down form would
be able to claim an Investment Tax Credit (“ITC”) where at least
20% local value addition is incorporated therein: the ITC would be
computed at the rate of 5% of the cost of new plant and machinery
excluding motor vehicles and would be available for a maximum
period of 3 years. The ITC is available in respect of investment made
up to 30 June 2020.
This measure is comparable to the investment tax credit provided
in the Finance (Miscellaneous) Provision Act 2017 for the
production of certain categories of goods: this measure does
not provide for any limit on the amount of capital expenditure
incurred.
The treatment of any excess ITC should be clarified. However,
the qualifying expenditure which would be considered as “local
value addition” and the basis of computing the threshold of 20%
should be clearly defined to remove any doubts on its application:
it should be noted that this threshold may depend to a large
extent on the classification of the semi knocked down products for
customs duty and Value Added Tax purposes as well as the VAT
registration status of the company.
Budget 2018/2019 | June 2018 7
Reduced corporate tax rate of 3% for Solidarity Levy on Telephony Service
companies engaged in global trading Providers
activities The solidarity levy for telephony service providers will apply till 30
June 2020: the condition that the book profit should exceed 5% of
The corporate tax rate of 3% currently applicable on the profits
its turnover for the liability to arise is being repealed.
made on exports would be extended to global trading activities
effected by companies. The base for the payment of solidarity levy is being widened to
include all profitable telephony service providers irrespective of
The amending laws should define the activities that would be the level of profit made.
treated as global trading: it appears that international trading of
goods should fall within its scope.
The commencement date of this measure has not been Corporate Social Responsibility
specified. Although companies would be subject to a corporate
tax rate of 3%, companies other than those holding a GBL would Companies will not be allowed to offset any unused tax credit
still be required to make CSR contributions. against CSR payable. Companies which have been granted tax
holidays will be required to contribute to CSR.
The interaction of this measure with the tax that arises in the
country of source should be understood. Where the underlying We disagree with this measure on the basis that CSR is
activities are performed outside of Mauritius, the arm’s length conceptually an income tax: a company should be able to relieve
test should not apply in Mauritius and would be the subject any foreign tax against its total Mauritian tax charge on its foreign
matter of the jurisdiction where the economic activities are source income. Any treaty provides relief for the full amount
performed. of domestic taxes arising on a foreign income in the recipient
jurisdiction where such income has been subject to tax in the
source country: to the extent that foreign taxes exceed the
Investment tax credit domestic income tax, no tax is payable in the recipient jurisdiction.
The unavailability of a foreign tax credit against a CSR charge
Companies importing goods in semi-knocked down form would would lead to an additional tax burden where domestic companies
be able to claim an Investment Tax Credit (“ITC”) where at least are used in business structures. This measure discourages the use
20% local value addition is incorporated therein: the ITC would be of domestic companies in cross border transactions
computed at the rate of 5% of the cost of new plant and machinery
CSR is currently computed on the chargeable income of a
excluding motor vehicles and would be available for a maximum
company: thus the chargeable income would have to be computed
period of 3 years. The ITC is available in respect of investment made
even though a company is exempt from income tax.
up to 30 June 2020.
The effective date for this measure has not been specified.
This measure is comparable to the investment tax credit provided
in the Finance (Miscellaneous) Provision Act 2017 for the
production of certain categories of goods: this measure does
not provide for any limit on the amount of capital expenditure Scope of the Deduction of Tax at Source
incurred. (‘’DTS’’) mechanism
The treatment of any excess ITC should be clarified. However, The scope of the DTS mechanism has been widened to include
the qualifying expenditure which would be considered as “local commission: such payment will be subject to a withholding tax rate
value addition” and the basis of computing the threshold of 20% of 3%. Additionally, the current withholding tax rate of 5% on rental
should be clearly defined to remove any doubts on its application: payments would be increased to 10% where the recipient is a non-
it should be noted that this threshold may depend to a large resident person.
extent on the classification of the semi knocked down products for
customs duty and Value Added Tax purposes as well as the VAT The withholding tax on the payment of director fees to corporate
registration status of the company. bodies would be abolished.
We are of the view that the term “commission” should be clearly
defined in view of its commercial meaning and widespread use in
Companies operating in the Freeport a number of business transactions: in the context of cross border
sector commission payment, the tax should not generally apply where
the recipient is resident in a treaty partner country.
The income tax exemption currently applicable for Freeport
operators and Freeport developers on the export of goods will be
removed: however, they would not be required to make any CSR
contributions. A transitional provision has been introduced so
that companies which have been issued with a Freeport certificate
before 14 June 2018 will continue to be exempt from income
tax up to 30 June 2021. A number of other measures have been
introduced to modernise the Freeport sector.
In view of the reduced tax rate of 3% for companies engaged in
global trading activities, it would be useful to understand whether
a Freeport activity would be considered as a global trading
activity.
Budget 2018/2019 | June 2018 8
4. Tax administration
Authorisation to conduct prosecution for offences
Further to the increasing number of cases, the Director General of the MRA will have the
power to include any competent officer of his office to conduct any prosecution for offences
under the Revenue laws before any court, except the Supreme Court.
It will be useful to understand the reasons for the increase in the number of cases. The
success of a measure of this nature depends on its practical applications.
5% Payment on objection
In case a person has any objection with a tax assessment made by the MRA, a 10%
payment of the tax assessed is payable. The law will be amended so that an additional 5%
tax will have to be paid where written representation is made to the Assessment Review
Committee.
Return of information
Casinos, gaming houses and bookmakers will now have the obligation to submit return for
withheld taxes.
The success of this measure depends on a number of important factors including the
basis of the assessment. Cases on point of law should be excluded from the purview of
this measure.
Recovery of arrears of revenue
The Mauritius Revenue Act will be amended so that the recovery actions for tax arrears
under the various revenue laws are streamlined.
Whilst the objective of this measure is welcomed, the cases where tax arrears are not due
are still a cause of concern. Unless the person has all the relevant evidence, he may have
to pay a tax that has already been settled.
Allocation of payment of arrears
The MRA acts as a collecting agent for various governmental bodies, for example, collecting
National Pension Fund (‘’NPF’’), National Saving Fund (“NSF”) and Human Resource
Development (‘’HRD’’) Levy. However, the MRA will now have prescribed guidelines on
which debts to be prioritised to be cleared.
It seems that the MRA would devote its resources towards most important taxes or other
collections in terms of amount and obligations to recover a debt.
Expeditious Dispute Resolution of Tax Scheme
(‘’EDRTS’’)
The EDRTS was restricted to assessments of less than Rs 10 Million and for periods before
1 July 2015.
It will now be applied to assessments raised during the year ended 30 June 2016.
It is a fact that a number of cases have been resolved under the EDRTS. To that extent,
the proposed measure is welcomed. It is, however, felt that the measure should include
assessments issued during the year ended 30 June 2017.
Budget 2018/2019 | June 2018 95. Value Added Tax Supply of manual labour in the
agricultural or construction sector
An individual operating in the agricultural or construction sector,
such as a sirdar or a labour contractor, supplying manual labour to
Special levy under the Value Added Tax a VAT-registered person will be exempt from VAT.
Act This measure is designed to promoting a more labour intensive
workforce as the individual supplying manual labour would benefit
The bank levy will be dealt with in the Value Added Tax Act instead from an exemption for VAT purposes. However, the individual
of the Income Tax Act as from 1 July 2019: the levy will be would not be able to claim any input tax. The effective date of this
computed on the net operating income of the domestic operations measure has not been announced.
of commercial banks.
We are surprised to note that although special levy would
continue to be computed on the net operating income of the bank, Public buses
it would be administered under the VAT Act. The levy is not of The Minister announced that VAT exemption on semi low-floor bus
the same nature as VAT and to the extent that it is based on the bodies built on chassis would be extended to all buses meant for
net operating income, the current legislative framework appears public transport.
justified. The timing of the payment and the return should be
clarified. The rate applicable for the computation of the special This measure is welcomed as it would help in the development and
levy has not been specified. The book profit appears to be no promotion of local artists. The effective date for this measure has
longer relevant with this measure. not been announced.
VAT for Micro, Small and Medium Sized
VAT refund scheme Enterprises (MSMEs)
The Value Added Tax (“VAT”) refund scheme introduced by the
A VAT-registered person will henceforth not be required to pay VAT
Finance (Miscellaneous Provisions) Act 2011 would be widened to
on import of machinery and equipment, if the amount payable is Rs
include the following goods and services:
150,000 or more.
(a) Planter
This measure would benefit bus owners engaged in the provision
• Branch chopper of transport for the general public.
• Earth auger
Fees on the examination of vehicles
• Fogging machine
The zero-rated VAT status of fees payable for the examination of
• Handy blower vehicles (fitness) will be extended by another two years up to 30th
• Irrigation hose June 2020.
• Mini tiller, including blade The extension of the zero-rated status of fees is welcomed as
the car users would not pay VAT and the service provider would
• Land preparation works; and generally be able to claim its input tax.
• Rental of land leased for agricultural purposes.
Photovoltaic system
(b) Purchase of musical instruments including guitar, drum set,
All components, in addition to photovoltaic panels, generators,
dhol, flute and violin, by local artists.
batteries and inverters, forming an integral part of a photovoltaic
This measure is welcomed as it would help in the development and system would henceforth not be subject to VAT.
promotion of local artists. The effective date for this measure has
not been announced. Clarity should be brought on whether these components would
be classified as exempt or zero-rated supplies for VAT purposes.
VAT for Micro, Small and Medium Sized A zero-rated status would ensure that there would be no VAT
burden. Currently photovoltaic generators, panels, batteries and
Enterprises (MSMEs) inverters are zero rated.
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.
This measure aims at promoting local entrepreneurship as it is
expected to ease the cash flow of businesses. We believe that any
installation cost, together with the related service should be taken
into consideration to determine the threshold of Rs 150,000 if the
installation cost is incidental to the machinery and equipment so
that it forms part of the same commercial and legal arrangement
with the foreign party.
Budget 2018/2019 | June 2018 10Recovery of VAT in hospitality sector 7. Background
VAT paid by VAT-registered persons, whose main activity is the
supply of accommodation, catering, entertainment or rental/lease
of motor vehicles will be available as credit for input tax.
This is a welcomed clarification in view of the number of litigations • Uncertainty and adversity at the global level
on the input tax deductibility of such expenses. Cases where such • Impact
► of external pressures cannot be underestimated
activities are not recurrent should be clarified: otherwise the
principle of neutrality would be breached. • Ambition
► is to have a stronger economic performance
• Recognition
► of the fundamental values in a new landscape
VAT to be clawed back on capital goods • The
► Budget is built on seven major strategies
The MRA will be empowered to claim the VAT refunded on capital • Annex
► to the Budget Speech is an integral part of the proposed
goods exceeding Rs 100,000 if an operator registers voluntarily measures:
for VAT purposes solely for benefitting from VAT refund on capital
• Part
► A-taxation and public finance
goods and is subsequently deregistered for VAT purposes.
• Part
► B-other budget measures, like the set up of a Single
This measure reinforces the power of the MRA for abusive cases
Licensing Agency and the processing of work permit
on VAT refund relating to capital goods.
applications
• Part
► C-other legislations, including the Companies
6. Budget outturn and estimates Act, the Employment Rights Act and the Non-Citizens
(Employment Restriction) Act
Budget outturn
• Budget deficit for 2017-2018 is expected to be 3.2% of GDP:
with a total revenue of Rs106.8 billion and total expenditure of
Rs 122.3 billion
• P
► ublic sector debt is expected to decline from 64.8% of GDP at
end of 30 June 2017 to 63.4% by the end of June 2018
Budget estimates for 2018-2019
• Total expenditure: Rs 133.8 billion
• Recurrent
► spending: Rs 115.9 billion
• Capital
► expenditure: Rs 17.9 billion
• T
► otal revenue: Rs 117.4 billion
• Tax
► receipts: Rs 99.7 billion
• Non
► tax receipts: Rs 8.8 billion
• Grants:
► Rs 8.9 billion
• O
► verall budget deficit: Rs 16.3 billion-3.2% of GDP
11 Budget 2018/2019 | June 20188. The seven broad strategies • Support
► to University of Mauritius so that it can double its intake
of students in Computer Science and Software Engineering
• Provision
► to train students in primary and secondary schools in
coding
• Set up of a National Regulatory Sandbox licencing for Fintech
Strategy one: Our youth our future activities
Our young people need the opportunity and the means to access • New
► licensing activities to be created by the FSC
the labour market...
• Custodian
► of Digital Assets and Digital Market Marketplace
Our Youth Our Future
• Objective
► is to provide a safeguard of digital assets by
• Target 14,000 unemployed though a number of measures, investors and enable digital assets exchange
including the following:
• FSC
► will also issue guidelines on investment in crypto
• 3,000
► youths will join the National Skills Development currency as a digital asset
Programme
• Thus,
► applicants for Fintech activities will have appropriate
• Youth
► Service Programme will be a new component cyber-security and cyber-resilience policies and capacities
aimed at developing soft skills like work ethics and
discipline • Harmonization
► of laws against money-laundering, terrorist
financing for banking and non-banking financial services so that
• Another
► 3,000 unemployed will be enrolled in the National they are consistent with the development in Fintech
Apprenticeship Programme
• Reform in the financial services sector:
• Introduction
► of SME Employment Scheme: each graduate
will receive a monthly stipend of Rs 14,000 over two years of • New
► harmonized regime for Global Business companies and
employment a separate fiscal regime for banks
• Youth
► Employment Programme will focus on job placements • As
► from January 2019, the FSC will not issue Category 2
for HSC holders Global Business Licence: a grandfathering provision would
apply for existing companies
• Promoting Work@Home Scheme
• Global
► Business companies will be required to comply with
• Double
► deduction for wage and salary costs for first two enhanced substance requirements
years
• New
► framework to govern and improve the oversight of
• Annual
► tax credit of 5% for investment made in the Management Companies
relevant IT system for three years
• FSC
► will work with other countries so that the
• Investment
► of some Rs 160million in the construction of the competitiveness of Mauritius is enhanced as a financial
Civil Service College at Reduit centre
• FSC,
► in collaboration with the OECD, will host a Regional
Strategy two: New opportunities for Centre for capacity building and combat against financial
malpractices
private investment
... aim to foster the development of a new growth pole revolving
around Artificial Intelligence, blockchain technologies and Fintech. Strategy three: new wave for import
New opportunities for private investment substitution and revive export led
• Set up of Mauritius Artificial Intelligence Council with members activities
of the public and private sectors as well as international
….to boost private investment and generate jobs but also to reduce
experts to drive Artificial Intelligence activities and advise
our trade and current account deficits.
Government on the appropriate course of action
Import substitution
• Set
► up of a steering committee under the Prime Minister’s
Office to ensure consistency between Ministries and ensure • Focus on production of food crops: idea is to set up 100 farms
timely implementation of the digitization project over the next two years under a Sheltered Farming Feature that
will have the following features:
• CEB
► will offer a special rate of electricity to accredited data
center operators having at least a Tier 3 infrastructure • Farms
► will be made available on a Ready-To-Operate basis;
• New
► scholarship scheme for students wishing to specialize in • Provision
► of facilities like security and marketing by the
digital technology: 50 students per year will benefit from this Economic Development Board
measure on an annual basis
• Technical
► assistance provided by the Food and Agricultural
Research and Extension Institute
• Access
► to finance from Development Bank of Mauritius and
Mauback at a reduced rate of 3%
• Income
► from the projects would be exempt from tax for the
first 8 years;
Budget 2018/2019 | June 2018 12• Government
► will ensure that the sheltered farms will be • The
► enhanced bilateral cooperation with Saudi Arabia and
equipped with rain harvesting systems and photovoltaic Middle East Countries
technology
• Renewed
► partnership with member states of the
• Funds
► provided for the training of households in aquaponics Commonwealth Group; and
for the production of water adaptive vegetables in freshwater
• Framework
► agreement for the continental framework
ponds and basins
agreement for the continental FTA in Africa
• Measures to boost food security programme:
• Introduction
of a 5-year tax holiday for Mauritian companies
• Contribution
► of Rs 30million by Government to a new collaborating with the Mauritius Africa Fund for the
Crop Insurance Scheme development of infrastructure in the Special Economic Zones:
the tax holiday will apply to investment in SEZ infrastructure
• Subsidy
► on production of onion and potato seeds will be development and will benefit project developers and project
increased financing institutions
• Set
► up of a National Animal Identification System to • Government
is working with EU to set up a loan guarantee
electronically identify each animal with a unique number facility to assist cross border investment within the Africa
• Mauritius
► Meat Authority will set up a new system for the Strategy
collection, slaughter and sale of pigs • Encourage
community-based and inclusive tourism
• Write
► off of all outstanding loans contracted under the Pig • Pilot
project: harness the potential of Mahebourg as a
Breeders Relaunching Scheme “Village Touristique”
• Ministerial Committee has been set up to assess the situation • Build
on historical and green assets; like the Blue Bay
in the cane industry to address the various challenges marine Park and the Naval Musuem
• Measures in connection with the Ocean economy: • Project
will be implemented through a public-private
• Creation
► of an Ocean Economic Unit to prepare a National partnership endeavor
Ocean Policy Paper • New
► Grant Schemes will be set up under the National Arts Fund
• Merger
► of the Mauritius Oceanography Institute and the for:
Albion Fisheries Research Centre • Encouraging
► emerging talents
• Development
► of an Ocean Observatory e-platform to • Production
► of art work
support the Marine Spatial Planning Initiative of Mauritius
• Stimulating
► research in various fields of arts and culture
• Conduct
► of geotechnical study in the continental shelf
management area of the Mascarene region to explore any • Economic
► Development Board will manage two schemes to
opportunities attract High Net Worth individuals. The criteria will be defined
in advance and a due diligence exercise will be performed
• Introduction
► of a Group Life Insurance Scheme for
registered fisherman to cover accidents and losses at sea • Citizenship
► for foreign nationals
• Allow
► foreign industrial fishing companies to fish in the • A
► non-refundable contribution of US1million is
shallow water banks provided that they sell all their fish required to be made to a Mauritius Sovereign Fund
on the Mauritian market
• Additional
► contribution of US$ 100,000 per
• Introduction
► of a grant of 60% on the cost of outboard member of family is required for the spouse and his
engines and fishing nets by fishermen cooperatives: this dependents
is capped at Rs 60,000
• Mauritian
► passport
• Measures
► in connection with the manufacturing sector:
• A
► contribution of US$ 500,000 is required to the
• New
► business parks will be set up in Cote D’Or; Riche Mauritius Sovereign Fund: additional contribution of
Terre and Rose Belle US$ 50,000 is required for each dependent
• Strengthen
► trade policy an use all economic diplomacy • Economic
► Development Board will also operate a Foreign
mechanisms to address the issue of dumping Manpower Scheme to attract foreign talents:
• Higher
► standards of quality and safety required for • An
► application for an occupation permit will be processed
imported products within 5 days; and
• Procedures
► on recruitment of foreign nationals will be • Employer
► will have to contribute the equivalent of one
streamlined as a result of the lack of appropriate skills month salary per foreign worker recruited
• Measures
► to boost demand for Mauritian products: focus • New
► package of fiscal and non-fiscal facilities to attract foreign
on economic diplomacy. Government is completing its retirees: they will be exempt from customs duties on the
negotiations in the context of the following: import of personal effects up to the value of Rs 2million.
• The
► Comprehensive Economic Cooperation Partnership • DBM
► will earmark Rs 1billion to support the Micro, Small and
Agreement with India Medium Sized Enterprises through a number of schemes
• The
► Free Trade Agreement with China
13 Budget 2018/2019 | June 2018Strategy four: building the strategic and
modern infrastructure
Our aim is to create the physical infrastructure that measures up
to our vision of the future-a future of modernity, high income and
smart living
Building the infrastructure
• Rs 37 billion will be invested in transport infrastructure over
the next three years
• R
► s 12 billion has been earmarked for the construction and
upgrading of roads
• I► nvestment will be made in three major projects to expand the
port facilities and improve its productivity
• T
► he Airport of Mauritius Limited will start procedures to extend
the new passenger terminal: objective is to increase passenger
handling capacity to 8 million annually
• I► ntroduction of a National Regeneration Scheme under the
Smart City Regulations
• S
► ome Rs 5.6 billion has been earmarked for NDU projects for
the construction and upgrading of drains, secondary roads and
small sports facilities across the island
Strategy five: Securing a sustainable
development in our environment
... a country with a sustainable environment that enables a healthy,
productive and meaningful life
Secure and protect our environment
• An amount of Rs 2 billion will be transferred to the National
Environment Fund: the Fund will be revamped so that it can
have the financial assistance from international sources like
the Green Climate Fund and the Global Environment Facility. Rs
450 million has already been received from the King Salman
Humanitarian Aid and Relief Centre and the Adaptation Fund
Board of the United Nation
• T
► he National Environment Fund will assist on a number
of projects: examples are the construction of drains, the
rehabilitation, protection and management of the beaches,
lagoons and coral reefs
• I► nvestment in a rainwater harvesting system will qualify for a
deduction against the taxable income of an individual
• V
► arious measures to maintain a sustainable environment: for
example Government will commission a maximum of 6 solar
farms and a waste-to-energy project will be implemented
14 Budget 2018/2019 | June 2018Strategy six: Lifting the quality of life
... a decent dwelling for all families and safety for everybody
Lifting the quality of life
• Health
• C
► onstruction of a new teaching hospital in Flacq
• D
► evelopment of a medical hub at Cote d’Or City
• S
► et up of a new cancer centre
• P
► rovision for the acquisition of a mobile caravan to
promote early detection of breast and cervical cancer
• P
► rovision of Rs 100 million for e-Health
• Sports and leisure
• Publication of a National Sports and Physical Activity
Policy in July 2018: investment of Rs 38million to provide
sports and physical activity programmes
• R
► s 75million is being provided to support the JIOI 2019:
in respect of the organisation of the game Rs 195 million
is being earmarked
• U
► pgrade of 17 sporting facilities for a total amount of Rs
375 million
• Education
• Construction of 2 pre-primary units at Grand Baie and
Montagne Ory
• Construction of a gymnasium in six State Secondary
Schools
• Set up of specialist rooms for Food and Textile Studies and
Design and Technology
• Increase in additional deduction for deduction for
dependent child pursuing tertiary education
• Decent dwelling
• Fixed penalty will apply to additional 63 offences
• ► Fine for speeding of more than 25 km per hour increased
from Rs 2,500 to Rs 10,000
• ► Fine for disqualification will be increased from Rs 10,000
to Rs 100,000
• ► A Cumulative Road Traffic Notice will be issued to a driver
after he has committed three cumulative road traffic
offences under the new system
• ► Issue of probationary driving licence for 2 years
• ► Zero tolerance of alcohol will be applied to drivers
• ► Additional mobile speed cameras will be installed to
perform spot checks
• ► The Road Development Authority will be provided with Rs
600 million for road maintenance
Budget 2018/2019 | June 2018 15Strategy seven: Creating an inclusive and
caring society
Too many gender gaps have been with us for too long
Creating an inclusive and caring society
• Introduction of gender considerations
• I► nclusion of a chapter on gender mainstreaming in 3 Year
Rolling Strategic Plan
• C
► onduct of a study on the introduction of gender-based
budgeting
• A
► mendment to the Employment Rights Act for mothers
with less than 12 months service
• G
► overnment will come up with a Gender Equality Bill
• T
► raining of 250 Government officials to deal with gender
issues
• A
► llocation of Rs 200,000 to each Ministry to promote
awareness programme and implement activities on
gender mainstreaming
• E
► ach Ministry will be required to have a Gender Cell that
will encourage greater balance in the decision making
process
• T
► ax incentives to creches
• Enhancing support to our elderly
• Construction of two elderly day centres at Bambous and
Chemin Grenier
• S
► pecialised training for 50 carers
• I► ncrease in monthly grant to employees of residential care
homes and institutions from Rs 6,071 to Rs 8,500
• Enhancing consumer welfare
• Removal of surcharge on late payments governed by the
Hire Purchase and Credit Sales Act
• F
► inalisation of the Ombudsperson for Financial Services
Bill to better protect consumers for all financial services
• B
► lood Glucose Strips will be subject to the maximum
mark-up system so that its price for each pack of strips is
expected to decrease between Rs 40 and Rs 170
• S
► tricter control on quality of consumer goods
• R
► eduction in the price of Mogas from Rs 52 to Rs 49.65
per litre
• R
► eduction in the price of gas oil from Rs 41.90 to Rs 40
• R
► eduction in the price of LPG of 12 Kg from Rs 270 to Rs
240
16 Budget 2018/2019 | June 2018Contact us
For additional information regarding this Alert, please contact the
following:
Ernst & Young, Mauritius
Ryaad Owodally
+230 403 4717 ryaad.owodally@mu.ey.com
Assad Khoosee
+230 403 4738 assad.khoosee@mu.ey.com
Kawsar Aumeer
+230 403 4777 kawsar.aumeer@mu.ey.com
Kooshal Mungrah
+230 403 4777 kooshal.mungrah@mu.ey.com
Vashist Hassea
+230 403 4777 vashist.hassea@mu.ey.com
Budget 2018/2019 | June 2018 17Budget 2018/2019 | June 2018 18
The information in this pack is intended to provide only a general outline of the subject covered. It should not be
regarded as comprehensive or sufficient for making decisions, nor should it be used in place of professional advice.
• Accordingly, Ernst & Young accepts no responsibility for loss arising from any action taken or not taken by anyone
using this pack.
• Further, the information in this pack will have been supplemented by matters arising from any oral presentation by
us, and should be considered in the light of this additional information.
• If you require any further information or explanations, or specific advice, please contact us and we will be happy to
discuss matters further.
EY | Assurance | Tax | Transactions | Advisory
About EY
EY is a global leader in assurance, tax, transaction and advisory services. The insights
and quality services we deliver help build trust and confidence in the capital markets and
in economies the world over. We develop outstanding leaders who team to deliver on our
promises to all of our stakeholders. In so doing, we play a critical role in building a better
working world for our people, for our clients and for our communities.
EY refers to the global organization, and may refer to one or more, of the member firms of
Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global
Limited, a UK company limited by guarantee, does not provide services to clients. For more
information about our organization, please visit ey.com.
© 2018 EYGM Limited.
All Rights Reserved
Creative Services ref.3097. Artwork by Upton.You can also read
