Budget Highlights 2020 2021 - 4TH JUNE 2020 - Temple Group | Mauritius
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Budget Highlights
2020 - 2021
4TH JUNE 2020
PREAMBLE Temple Group presents you the highlights of the Budget Speech 2020-2021 made by the Minister of Finance, Economic Planning and Development. The Budget 2020-2021 aims at: »»preserving employment »»preserving the livelihood of vulnerable families »»rebuilding the economy of the island »»ensuring a comprehensive set of measures to enable »» inclusive, robust and durable development.
BUDGET HIGHLIGHTS FISCAL MEASURES
FATF ACTIONSector
Construction PLAN
»»The construction
»»The followingsector
actionsis regarded
will as the
be undertaken engine
to meet of our recovery
the requirements of the
FATF action plan by September 2020:
from the current economic crisis. With this view a high-level Commit-
tee chaired»by the PMsupervisions
»Risk-based is set up to expedite with
in accordance processing and approvals
the recommendations of of
construction theprojects.
FATF; New measures for the construction industry in-
clude: »»Targeted outreach programmes to promote clear understanding of
money-laundering and terrorist financing risks;
»»Rs 12 billion will be provided for the construction of 12,000 social hous-
ing units across the reporting
»»Increased whole island.
of suspicious transactions;
»»Rivière des»»Targeted
Anguilles Damsanctions
financial will be in
constructed atfinancing;
cases of terrorist an estimated
and cost -
Rs 7.5 billion.
»»Timely access to beneficial ownership information
»»Main bus terminals along the Port Louis – Curepipe corridor will be
»»The Securities Act
converted into multi-modal urban terminals at an investment of around
Rs 6 billion.»»The Securities Act will be amended to create an obligation on corporate
finance advisory to keep and maintain records of debts raised on behalf
of issuers
BANKING ACT
»»Amendments to the Banking Act will include:
»»Encouraging digital banking
»»Providing for the ground for refusing an application for a foreign
exchange dealer or money changer licence be set out in the law
»»Transferring the responsibility for supervision of money lenders from
the Bank of Mauritius (BOM) to the Financial Services Commission (FSC)
»»Allowing the BOM the discretion to extend the time period for rotation
of audit firm for an additional period of 2 years
»»Private Pensions Scheme Act
»»The Private Pensions Scheme Act will be amended to:
»»Allow for a member of a private pension scheme to transfer the amount
of accrued benefits to another private pension scheme; and
»»Establish a procedure for unclaimed funds under a private pension
scheme to be transferred to a special fund to be set up by the FSC.
FINANCIAL SERVICES
Construction SectorACT
»»The construction sector is regarded as the engine of our recovery
from the current economic crisis. With this view a high-level Commit-
tee chaired by the PM is set up to expedite processing and approvals of
»»The Financial Services Act will include the following amendments:
construction projects. New measures for the construction industry in-
clude: »»Provide for the definition of ‘peer to peer’ lending
»»Rs 12 billion will be provided
»»Empower the FSC to for theinformation
collect construction of 12,000 social
on a conglomerate hous-
group,
ing units across theunregulated
including whole island.
entities, which would impact on the safety and
soundness of the financial group
»»Rivière des Anguilles Dam will be constructed at an estimated cost -
»»Provide that the Enforcement Committee shall consist of not more
Rs 7.5 billion.
than 4 employees designated by the Board
»»Main bus terminals along the Port Louis – Curepipe corridor will be
»»Provide for the duties of auditors of all licensees of the FSC to include
converted into multi-modal
the reporting urbantoterminals
of irregularities the FSC at an investment of around
Rs 6 billion.
OTHER FINANCIAL MEASURES »»A new AML/CFT (Miscellaneous Provisions) Bill will be introduced »»A specialised Financial Offences Court will also be set up. »»In line with the 10-Year Blueprint a number of measures will be introduced including a Central Bank digital currency »»BOM will also come up with new frameworks for digital banking, private banking and wealth management by banks »»A dedicated Venture Capital Market will be set up at the Stock Exchange of Mauritius for start-ups and SMEs
BUDGET HIGHLIGHTS
TAX REGIME
INCOME EXEMPTION THRESHOLDS
The income exemption thresholds will be increased by
amounts ranging from Rs 15,000 to Rs 80,000
Category From To Increase
(Rs) (Rs) (Rs)
Individual with no dependent 310,000 325,000 15,000
Individual with one dependent 420,000 435,000 15,000
Individual with two dependents 500,000 515,000 15,000
Individual with three dependents 550,000 600,000 50,000
Individual with four or more dependents 600,000 680,000 80,000
Retired/disabled person with no dependent 360,000 375,000 15,000
Retired/disabled person with dependents 470,000 485,000 15,000
N.B: These new thresholds will be effective as from income year starting on
1st July 2020, i.e. on income received by an individual as from 1 st July 2020.
SOLIDARITY LEVY
The Changes to the Solidarity Levy are as follows:
2019-2020 2020-2021
Levy will be applied on the chargeable
income plus dividends in excess of Rs 3
million applicable to a Mauritian citizen at
the rate of 25%.
Lump sum income received by a person
Currently applicable on resident
by way of commutation of pension, death
individuals having chargeable income
gratuity or as compensation for death or
plus dividends in excess of Rs 3.5 million
injury is excluded from the computation
in a year individuals are required to pay
of the Solidarity Levy.
5% of the excess
The Pay As You Earn (PAYE) system will
apply to the Solidarity Levy.DEDUCTION FOR DEPENDENT
Taxpayers will be allowed to claim a bedridden next of kin who is in their
care as their dependent allowing for an additional annual deduction ranging
from Rs 80,000 to rs 110,000 as long as the total number of dependents does
not exceed 4.
DOUBLE TAX DEDUCTION ON
INVESTMENT
Enterprises which have been affected by COVID-19 will be entitled to a dou-
ble tax deduction on their investment in Plant and Machinery during the
period 1st March 2020 to 30th June 2020ACCELERATED DEPRECIATION
»»Capital expenditure incurred on electronic, high precision machinery
or equipment and automated equipment will be allowed as a deduction
in the year in which it is incurred instead of being amortised over more
than two years.
»»Green technology equipment, which is depreciated over two years, will
now include equipment and machinery used for eliminating, reducing
or transforming industrial wastes.
SOLIDARITY LEVY ON TELEPHONY SERVICE
PROVIDERS
»»The Solidarity Levy on telephony service providers introduced in 2009
and subsequently extended, will be made permanent. This will apply
with differing rates to profitable companies as well companies not
having made a profitINCOME TAX HOLIDAY
»»An 8-year income tax holiday will be granted to a company manufacturing:
»»neutraceutical products with operations starting on or after 4th June
2020
»»pharmaceutical products, medical devices or high-tech products with
operations starting on or after 8th June 2017LEVY ON CORPORATES
»»A company, having gross income exceeding Rs 500 million in an
accounting year or if it forms part of a group of companies where the
gross income of the group exceeds Rs 500 million, will be subject to a
levy on its annual gross income at the rate of –
»»0.3% for insurance companies, financial institutions, service
providers and property holding companies; and
»»0.1% for other companies.
»»The levy will not apply to a company which operates in the tourism
sector or which holds a Global Business License
CUSTOMS DUTY
»»Customs duty on goods imported by post or courier services will apply as
from Rs 1000 rather than from Rs 3000.
»»Customs duty on import of sugar will be increased from 80% to 100%PROPERTY TAX
»»The following key exemptions have been introduced relating to property
tax:
»»Registration Duty on acquisition of a newlybuilt dwelling (Not applicable
to IRS, RES, PDS or IHS)
»»Land Transfer Tax to a promoter undertaking construction of housing
projects for Mauritians (Amongst other terms, the maximum price of a
residential unit of Rs 6 Mil. will be raised to Rs 7 Mil.)
»»Registration Duty for first-time buyers where land acquired is less than
20 perches
»»Each of the above exemptions is subject to specific conditions relating to
construction dates and applicable thresholds.EXCISE DUTY »»Excise Duty on Sugar Sweetened Products has been doubled on sugar sweetened beverages. This duty has now also been extended to a stated list of locally manufactured and imported non-staple sweetened products »»Excise regulations will be amended to licence importers and manufacturers of sugar sweetened products as in the case of sugar sweetened beverages »»Extension of moratorium period for non-affixing of tax stamps on bottles of beer and wine to the 2nd Feb 2021 in light of COVID-19 disruption
EXCISE DUTY
»»Motor Vehicles
»»A rebate on the amount of customs/excise duty payable will be granted
on vehicles as follows:
»»Motor Cars up to 1,000 cc: 40% of the excise duty payable on the motor
car or Rs 100,000, whichever is the lower
»»Motor Cars 1,001 to 1,600 cc : 30% of the excise duty payable on the
motor car or Rs 125,000, whichever is the lower
»»Buses, Double/ Single Space Cabin Vehicles and Vans: 30% of the
customs/excise duty payable on the motor vehicle or Rs 125,000,
whichever is the lower.
»»This is subject to specific warehousing and custom clearance datesVAT
»»The following goods are to become zero-rated
»»Unprocessed agricultural and horticultural produce;
»»Live animals used to produce food for human consumption other than
live poultry;
»»Transport of passengers by public service vehicles excluding contract
buses for the transport of tourists and contract cars;
»»Medical, hospital and dental services.
»»Digital and electronic services provided through internet by nonresidents
for consumption in Mauritius will be subject to VAT.TAX ADMINISTRATION OF THE INCOME TAX ACT
»»Income Tax Refund by the MRA:
»»The time limit to effect income tax refunds will be standardised to 60
days for all taxpayers. The time limit will run as from the date all necessary
documentation pertaining to the application is received by the MRA.
»»E-services platforms:
»»The MRA will develop further its e-services platform to improve
efficiency and transparency in service delivery to taxpayers.
»»Alternative Minimum Tax on companies carrying on life insurance
business
»»A life insurance business will pay tax based on the existing system of
taxation or under an alternative minimum tax, whichever is the higher.
»»The alternative minimum tax will be computed at the rate of 10% of
profit attributable to shareholders adjusted for capital gains or losses»»
BUDGET HIGHLIGHTS
SOCIAL SECURITYSOCIAL SECURITY
»»Basic Retirement Pension of Rs 9,000 maintained, to all 60+ individuals
»»Abolishing the National Pension Fund to introduce the Contribution
Sociale Généralisée (CSG), a contributory, participative and collective system
benefitting citizens of 65+
»»Under the CSG as from the 1st September 2020, payment to the fund will
be made as per below:
Category of Employee Contribution on the monthly salary
Earning up to Rs 50,000 monthly Employee: 1.5%
Employer: 3%
Earning more than Rs 50,000 monthly Employee: 3%
Employer: 6%WORKERS RIGHTS
»»The Road Act will be amended to allow controlled advertising on
footbridges to encourage the private sector to sponsor the maintenance and
embellishment of the footbridges and to also provide security for pedestrians.
»»The Road Traffic Act will be amended to enable Holders of a “B Carrier”
license to lease their vehicles, including the carriage of goods.
»»Rs 5 billion will be allocated for the completion of the Metro project from
Rose Hill to Curepipe.
BUDGET HIGHLIGHTS
WORKERS’ RIGHTS ACTWORKERS’ RIGHTS ACT »»Definition of “earning” aligned across all legislation to that of the Remuneration Regulations »»Guaranteed remuneration to workers in the private sector who will not be able to work in case of heavy rainfall. »»Protection against discrimination at work will be reinforced. »»A new framework to prevent double payment in the Portable retirement Gratuity Fund when severance allowance is paid.
WORKERS’ RIGHTS ACT »»The end of year bonus to employees earning up to Rs 100,000 monthly is secured under the Act »»Measure for the prevention of violence at work to be realigned with the requirement of international laws »»The amount of Transition Unemployment Benefit to laid off workers affected by COVID-19 will be increased. »»To prevent loss of employment, the Government is injecting Rs 15 Bil to help workers affected during the period of “chômage technique” by a monthly allocation of Rs 5,100 for a period of 6 months
BUDGET HIGHLIGHTS LOCAL INDUSTRY & SME’S
MEASURES TO PROMOTE LOCAL MANUFACTURERS
»»Fostering of a ‘Buy Mauritian’ program
»»Minimum shelf space of 10% for locally manufactured goods in
supermarkets
»»Margin of Preference of
»»20% on public purchases to all local manufacturing companies; and
»»30% for manufacturing SME’s
»»Investment tax credit of 15% over 3 years extended to all manufacturing
companies
»»Double deduction on cost of acquisition of patents and franchises & cost
incurred to comply with international quality standards and normsMEASURES TO SUPPORT SME’S »»Broadening of access to factoring facilities through Maubank »»Subsidisation of 50% of the factoring fee per invoice for SMEs »»The Procurement Policy Office will require Public Bodies to procure specific goods and services from SMEs only »»Public Bodies to pay SMEs within 14 days from date of invoices in respect of supply of goods and services »»SMEs and cooperative societies will benefit from a grant of 15 percent on cost of assets of up to a maximum of Rs 150,000 under the DBM Enterprise Modernisation Scheme.
OCCUPATION AND WORK PERMITS »» The Economic Development Board will be the only agency responsible for the processing of Occupation Permits »» Combination of the Work Permit and its corresponding Residence Permit into a single permit »» Validity of the Occupation Permit and Residence Permit for Retired Non- Citizens extended to a period of 10 years and renewable thereafter »» Occupation Permit Holders and Retirees on Residence Permits will be able to invest in other venture with no shareholding restrictions »» Minimum investment amount to obtained an Occupation Permit as an Investor will be reduced to USD 50K »» Minimum turnover and investment requirements for the Occupation Permit (Innovative Investor) removed »» Minimum monthly salary requirement of MUR 30,000 limited to ICT professionals to obtain an Occupation Permit will be extended to other specified sectors
PERMANENT RESIDENCE PERMITS »» Validity of a Permanent Residence Permit will be extended to 20 years »» Occupation and Residence Permit Holders, having held their permit, for 3 consecutive years, will be eligible to apply for the Permanent Residence Permit »» Minimum investment to be made by a person seeking to obtain the status of a Permanent Resident Permit by way of investment has been reduced to USD 375,000
ACQUIRING PROPERTY AS PERMIT HOLDERS
»» Non-citizens holding any type of Occupation, Residence or Permanent
Residence Permit will be allowed to acquire land (up to 2100 m2) for residential
purposes within smart cities.
»» Measure open for a period of 2 years only – ending on 30 June 2022 – and will
be limited to 25% of the land area planned for the construction of residential
properties within the smart cities
DEPENDENTS OF PERMIT HOLDERS
»» Spouse of an Occupation Permit Holder will not need a permit to work or
invest in Mauritius
»» Occupation Permit Holders now allowed to bring in their parents as their
dependentsNON-CITIZENS HAVING OR WISHING TO ACQUIRE
PROPERTY IN MAURITIUS
»» Non-citizens having a Residence Permit granted through the acquisition
of property under a real-estate scheme will not need an Occupation or Work
Permit to invest or work in Mauritius
»» Minimum investment to be made by a non-citizen seeking to acquire
property under the real-estate scheme and applying for a Residence Permit
under that property has been reduced to USD 375,000
»» The Prime Minister may validate the acquisition of a property acquired by
a non-citizen after the transaction has been completed where he is satisfied
with :
»» Credentials of the non-citizen
»» Omission to seek prior authorization was due to a mistake or oversightBUDGET HIGHLIGHTS CONSTRUCTION
CONSTRUCTION SECTOR
»» The construction sector is regarded as the engine of our recovery from the
current economic crisis. With this view a high-level Committee chaired by
the PM will be set up to expedite processing and approvals of construction
projects. New measures for the construction industry include a variety of
housing and infrastructure projects including:
»» Construction of 12,000 social housing units across the whole island
»» Construction of Rivière des Anguilles Dam
»» Conversion of main bus terminals along the Port Louis – Curepipe
corridor into multi-modal urban terminals
»» Completion of Metro System from Rose Hill to Curepipe
»» Construction of new roads and bridgesMEASURES TO INCENTIVISE CONSTRUCTION »»Waiving fees related to the Building and Land Use Permit (BLUP) for construction of pharmaceutical manufacturing factories, food processing plants and warehouses. »»Facilitating purchases of immovable properties by foreign buyers through digital Power of Attorney. »»Extending the Construction of the Housing Estate Scheme and the Accquisition of the Newly Built Dwellings Scheme for another period of two years and raising the eligibility threshold under these schemes from 6 to 7 million rupees. »»Changing the VAT payment date from date of invoice to date of receipt for government contracts in relation to construction works. »»Shortening the timeframe for payment of contractors in relation to government projects and payment of retention amounts »»The Construction Industry Development Board Act will be amended to review the grading of contractors. »»There will be an active promotion of local expertise, favouring input from and employment of local firms »»Public projects with investments of less than Rs 300 million and where pre- qualification is not required by Central Procurement Board will be open to Mauritian companies only.
AMENDMENT OF CONSTRUCTION INDUSTRY DEVELOPMENT BOARD (CIDB) ACT »»Review of the grade ceilings for value of contract that a contractor is allowed to undertake. New ceilings will be revised upwards to reflect the prevailing market value of works and offer more opportunities to eligible contractors. »»The CIDB (Registration of Consultants and Contractors) Regulations 2014 will be reviewed to allow a Joint Venture Contractor, comprising two or more contractors, to undertake works of higher grades
BUDGET HIGHLIGHTS
EXPORTEXPORT »»Freight Rebate Scheme for exports to Africa. »»Trade Promotion and Marketing Scheme for exports to Japan, Australia, Canada and the Middle East »»All export covered by the Export Credit Insurance Scheme »»50% refund on the costs of certification, testing and accreditation of local laboratories »»Registration duty and land transfer tax exempted for the companies in the Export Sector for the acquisition of immovable property.
BUDGET HIGHLIGHTS MISCELLANEOUS COVID-19 RELATED MEASURES
OTHER MEASURES »»The allocation of Rs 12 Bil to the health sector over the next fiscal year is in line with the intent of the government to strengthen our public health system for the long term. An overview of these measures is provided under the “Healthcare” segment. »»Please note that other segments making reference to COVID-19 related measures are: housing, the fiscal regime and amendments to the Workers’ Rights Act. »»An overview is provided below of key measures will come into effect, specifically linked to COVID-19 and which have not been covered in our other segments.
OTHER MEASURES
»»For distressed companies affected directly by the COVID-19 pandemic in the
agricultural sector, the Development Bank of Mauritius (DBM) will provide
loans at the concessional rate of 0.5 percent per annum.
»»Rs 19 Mil to finance the COVID-19 Action Plan 2020 to support the production
of virtual concerts in the interest of consolidating arts and culture
»»In the interest of reducing the cost of doing business:
»»The MRA will regulate fees charged by freight forwarders for Groupage
cargo.
»»The fees for re-instating companies will be reviewed downwards from
Rs 15,000 to Rs 5,000 and the requirements for giving notice shall be
done online.
»»Application fee for a Building and Land Use Permit will be waivedOTHER MEASURES »»A Supplementary Appropriation Bill will be introduced to ultimately enable a transfer of Rs 2 Bil to the National Environment Fund and will cover exceptional expenditure incurred in connection with the COVID-19 pandemic in the context of securing sustainable and inclusive development »»Rs 80 Bil will be allocated and invested via the MIC for a number of initiatives including, amongst other things, supporting enterprises in financial difficulty due to COVID-19 »»Enterprises which have been affected by COVID-19 will be entitled to a double tax deduction on their investment in Plant and Machinery during the period 1st March 2020 to 30th June 2020.
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