Mauritius Budget 2023: Tax and Changes Explained

Category: About Mauritius

Understanding the New Mauritian Tax Landscape

Tax incentives

  • Partial exemption on interest earned by a Collective Investment Scheme and Closed End Fund is increased from 80% to 95%.
  • Increase the tax deduction from 200% to 300% for companies employing disabled individuals on their compensation.
  • Profits from the sale of aviation fuel to an airline will be considered exports of commodities and will receive a preferential tax rate of 3 percent.
  • Costs incurred by new campuses or local educational institutions partnering with their counterparts in Africa;
  • Expenses incurred by a local company participating in financing, sponsoring, marketing, and/or distribution of an approved film project produced at least 90% in Mauritius and intended for theatrical or media streaming release under the Film Rebate Scheme.
  • Cost of establishing a childcare facility for businesses
  • Remunerations paid by employers to newly-employed women or women who have been unemployed for at least a year as part of the Prime an 
  • L'emploi programme.

Communication Service Providers

The applicable Solidarity levy on the Turnover component has been reduced from 1.5% to 1%. 

Companies with a loss are still compelled to pay the 1% levy.

Taxation of Banks

The incentive tax rate of 5% (third tax band) has been eliminated. As of YOA 2022/2023, the tax rates for banks will be as follows:

  • Chargeable income up to MUR1.5 billion  5%
  • Taxable income in excess of MUR1.5 billion  15%

The 15% investment tax credit over three years on new plant and apparatus (excluding motor vehicles) is extended to the fiscal year 2025/2026 for manufacturers.

Clarification provided that manufacturing companies producing both alcoholic and non-alcoholic beverages may claim the investment tax credit for expenditures on plant and apparatus used exclusively for the production of non-alcoholic beverages.

The double deduction for market research and product development expenses will no longer be restricted to the African market. However, this incentive is restricted to businesses with an annual revenue of less than MUR500 million

The tax rate for manufacturers of medical devices will be reduced by 3%. Exemption from tax on interest income for:

  • bonds, debentures, or sukuks issued by a foreign entity to finance renewable energy projects approved by the MRA;
  • bonds issued to finance all sustainable projects.

Donations to NGOs

Deduction of three times the amount of donations made by companies to NGOs involved in: supporting persons with health issues and disabilities, street children protection, and rehabilitation programmes, up to MUR1 million;

  • animal welfare and protection.
  • Tax Deduction at Source (TDS)

Introduction of TDS on payments made as follows:

  • By insurance companies to panel beaters and spray painters for repairs of policyholders' motor vehicles — 3%
  • To Interior Decorator/Designer — 5%
  • Exemption from TDS for fees paid to FSC-licensed management companies and investment advisors.

Individual Tax

Introduction of a progressive tax system

All income will be taxed incrementally, i.e., chargeable income will be divided into various revenue brackets. Each tax category will have a specific tax rate beginning at 0% and ending at 20%.

Elimination of the Solidarity Levy

It is proposed that a person will not be required to pay solidarity levy at a rate of 25% on leviable income exceeding MUR3 Million (capped at 10% of net income including local dividend).

Value Added Tax (VAT)

Special Levy on Banks

Alignment of special levy to 5.5 percent for all banks, regardless of operating income amount.

E-Invoicing System

MRA will launch a portal to assess vendors' Electronic Billing Systems and ensure that invoices are in a standardised e-invoicing format.

VAT Refund

Limit for cost of construction of MUR3 Million reintroduced for VAT refund on residential building, house or flat; and

Name and address of non-business persons must be specified on invoices issued by VAT registered persons, upon request, to facilitate VAT refund.

VAT Exemption

 Instead of being eligible for a VAT refund, event organisers are now exempt from paying VAT on accommodation costs; and

Construction of a purpose-built facility for the provision of primary and secondary education is now exempt from VAT.

Credit for input tax

Clarification that input tax credit may be claimed beginning on the date of voluntary registration.

Other levies

Home Ownership Scheme (HOS) and Home Loan Payment Scheme (HLPS) — 5% refund under HOS and HLPS extended until 30 June 2024.

Negative excise tax (refund) on electric car purchase — Refund of 10% (up to a maximum of MUR200,000) of the value at importation of electric motor car or electric motor vehicle for transporting products, extended until 30 June 2024.

Transfer of shares

For transfer of shares (in a company holding immovable property) exceeding MUR200,000 in value and requiring a supporting certificate from a professional Accountant, the duty/taxes (e.g. registration duty and land transfer tax) will be levied on the greater of the value declared in the deed of transfer or the value declared in the certificate. Currently, the tax is based on the certificate's value.

When a person acquires more than 20% of the share capital in a company and an option has been made to be taxed on the value of the transferred shares, a description of immovable property held by the company and a site plan must be provided at the time of registration of the deed of transfer. The objection procedure following an assessment of the value of transferred shares applies equally to the transferee and transferor if the transferor is subject to land transfer tax.

#MauritiusTaxReforms #TaxIncentives #EmploymentTaxDeductions #SolidarityLevyReduction #TaxExemptions #InvestmentTaxCredits #NonProfitDonationsTaxBenefits #VATRefunds

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