Time to
deliver
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2 | Budget 2018-2019
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Contents
1 2 3
Our Opinion Tax Perspective Public Finance
pg 4 pg 8 pg 11
4 5 6
Sector Reviews Taxation About PwC
pg 14 pg 31 pg 46
43 Immigration
4 | Budget 2018-2019
01
Our
Opinion
Time to deliver
Our opinion
The Hon. Pravind Jugnauth, Prime Minister The Government did well to contain its
and Minister of Finance and Economic recurrent expenditure against its initial
Empowerment painted a rather optimistic estimate and to reduce the recurrent budget
picture of the country’s performance, with deficit. The delays in public investment has
some healthy fundamentals. In recent years, also meant that the overall budget deficit for
we have been accustomed to projects or 2017-18 was maintained at 3.2% of GDP. The
measures being announced but being rolled deficit projection for 2018-19 continues to be
over year after year and from one budget to supported by the availability of external grants
another. Will this year be any different? and transfer from special funds, while public
Given that it is the penultimate year of this sector debt seems to be on a downward trend.
Government’s mandate, the pressure to However, the off “balance sheet” financing
deliver is mounting. The Government has being used by the Government means that
resorted to some populist policies and, with certain liabilities remain unrecognised and
many projects taking shape, it appears that masks the country’s real debt position.
economy is on the up.
Time to deliver
Our opinion (cont.)
There was recent public outcry over the At PwC, we estimate that this will cost nearly
potential hike in water charges or petrol Rs1bn to the country and this money could
prices. If the population expects water 24/7, have been better spent.
then they have to pay. However, the
Government resisted against such an In terms of sectorial reforms, the integration
unpopular measure and has maintained of the global business sector and domestic
water cost at its current low price. Further, economy is welcome and the changes to the
with the huge investment in the road tax framework are necessary to ensure that
network, a system of free usage will be Mauritius is not only compliant with
difficult to sustain and, unless car owners are international norms, but also remains
discouraged, there will be little switching competitive. With sugar prices at its lowest, we
onto the Metro-Express once operational. were also expecting some radical
announcements. Whilst the increase in custom
In the past, around 27% of the petrol taxes duties to 80% alone may not be enough, this
collected were used to fund road projects, may help to soften the short-term challenges
specifically from the Build Mauritius Fund or while the sector continues to reform and drive
Road Development Authority and financing efficiencies. The sector however needs much
through petrol taxes is likely to continue. The more.
Government again decided to gain popular
support by reducing petrol prices.
7 | Budget 2018-2019
Time to deliver
Our opinion (cont.)
Although unemployment is on a downward
trend, the low labour participation rate
remains a concern, with the workforce
representing only 47% of the total population
compared to countries such as Singapore at
66%. The budgetary measures around gender
mainstreaming may help to improve female
participation. The Budget also introduces new
measures to attract foreign talents or high net
worth individuals. However, the country
continues to experience challenges in its ability
to attract foreign talents and the current state
of the labour market continues to impede on
growth, especially as we look to diversify into
new sectors such as AI, Fintech, etc. The
proportion of foreign to local labour remains
low at 6% (Singapore at 37%).
02
Tax
Perspective
Dheerend Puholoo
Tax Partner
PwC Mauritius
Tax
Perspective
Tax
Perspective (cont.)
On the administrative front, taxpayers now The Budget has addressed to a large extent the
opting to appeal to the Assessment Review concerns of the OECD with the tax reforms.
Committee (ARC) will have to pay an We hope that the proposed measures will not
additional 5% of the tax assessments. There is jeopardise the status of Mauritius as a
presently a large number of tax disputes that competitive platform for making and routing
are either pending at the objection level or investments. While cash collection and dispute
the ARC, and this measure aims at reducing resolution seem to be the top priorities of the
the number of cases through resolution at the MRA, we feel that bolder measures are needed
objection level. It makes sense that we take to address them. On the positive side, the Hon.
steps to expedite the dispute resolution Minister of Finance and Economic
process. Development has very wisely used fiscal
measures to increase the disposal income of
However, the financial burden (legal and middle income earners.
consultancy costs, interest, etc.) is presently
borne by the taxpayer for litigation cases. The
taxpayers should also be compensated if a
case is eventually ruled in their favour. Check out experTaxTM, PwC’s leading tax
computation software on
The settlement of tax disputes through the https://www.pwc.com/mu/en/expertax.html
Expeditious Dispute Resolution has been
extended to tax assessments of less than
Rs10m raised between 01 July 2015 to 30
July 2016. This is yet another opportunity for
taxpayers to settle cases with reduced
penalties and interests. But we consider that
this incentive should have been extended to
all tax assessments presently under dispute.
03
Public
Finance
Jill Wan
Senior Manager
PwC Mauritius
Public
Finance
For 2018/2019, an estimated 4.1% Budget balance Deficit/(Surplus) as a % of GDP Growth Rate
GDP growth rate is also being
maintained for the third consecutive
year.
Public Debt
The 2017/2018 public debt has increased by
Public Debt 2.2% to reach Rs302.1bn, but has fallen as a
proportion of GDP (63.4% of GDP vs. 66.1% in
350 80%
2016/2017). The increase in debt level is
Domestic and external debt (MURm)
Public
Finance (cont.)
Expenditure
Government revenues and expenditure • Social Benefits are projected to
increase by 8.4% highlighting the
REVENUE
Rs117.4bn Value Added Social EXPENDITURE
Rs133.8bn
Government’s increased focus on
Benefits
Rs106.8bn Tax Rs122.3bn “Quality of Life” and “Welfare System”
Rs36.1bn Rs31.9bn in this budget.
Corporate & Rs33.0bn Rs29.5bn
04
Sector
Reviews
16 | Financial Services
25 | Public Sector
29| ICT
15 | Budget 2018-2019
Retrospective
Previous Budget (June 2017)
Our take on how many measures announces in
the Budget 2017 were completed by Sectors.
Manufacturing – 90%
Retrospectives in videos:
Financial
Services
John Li
Partner Key metrics
T: +230 404 5128
E: john.s.li@pwc.com
Blueprint
Finalised
Member of PwC's Financial
services industry group, focussing on the
firm’s Asset Management portfolio of clients. GBC1 companies
End of the Deemed Foreign Tax Credit
regime by 31 December 2018
January 2019
“Important and necessary No new Category 2 Global Business licence
will be issued from that date
reform of the global business
sector.” Fine of up to Rs1m
For non compliance with Bank of
Mauritius guidelines or for breach of
confidentiality of client information
Financial
Services (cont.)
• The Deemed Foreign Tax Credit regime • No distinction between Segment A and
for Category 1 Global Business Licence Segment B and new tax rates introduced
companies will be abolished as from 31 for banks. Chargeable income of Rs1.5bn
December 2018 will be taxed at 5% and above this
threshold, a tax rate of 15% will apply
• A partial exemption regime whereby
under certain conditions, 80% of • Banks with chargeable income in excess of
specified income will be exempted from Rs1.5bn will be taxed at 5% if pre-defined
income tax conditions are satisfied
• Collaboration with the OECD for hosting • Private banking business in Mauritius
a Regional Centre for capacity building allowed to import gold and other precious
and best practices to combat financial metals
malpractices
18 | Budget 2018-2019
Financial
Services (cont.)
Hospitality,
Manufacturing & SME
Olivier Rey
Partner Key metrics
T: +230 404 5145
E: olivier.rey@pwc.com
Rs1bn
The amount earmarked by DBM to assist
CIPS Leader, Olivier serves a range of large MSMEs
local and regional clients in PwC’s Assurance
line of service. 3%
The interest rate on financing offered to
start-ups
Rs3.2bn
The estimated cost of new runway at
Plaine Corail Airport
4,000
The estimated number of passengers that
will be handled by the dedicated cruise
terminal building in Port Louis Harbour
2
The number of new aircrafts of Air
Mauritius to increase capacity and
frequency of flights
20 | Budget 2018-2019
Hospitality,
Manufacturing & SME (Cont.)
Manufacturing Hospitality
• New business parks will be set up across • Mahebourg will be promoted as a ‘Village
the island including a high-tech park at Touristique’ and major cultural site, with
Côte-d'Or, a logistic park at Riche Terre sustainable tourism attractions
and a pharmaceutical and life sciences
park at Rose Belle • New digital platforms will be set up and
used as the preferred means of providing
• 5-year tax holiday for Mauritian information to tourists and promoting the
companies collaborating with the island
Mauritius Africa Fund for the
development of infrastructure in Special • Two new aircrafts will increase capacity
Economic Zones and flight frequency while expanding
destination network
• Setting up of a loan guarantee facility to
support cross border investment within • Construction of a dedicated cruise terminal
the Africa Strategy building and modern facilities at Port-
Louis Harbour
• Preferential access of our products on the
UK market will be maintained until end • All pleasure crafts will mandatorily be
of 2020 equipped with an Automatic Identification
System to improve safety at sea
• Streamlining the procedures for work
permit applications for foreign workers
21 | Budget 2018-2019
Hospitality,
Manufacturing & SME (Cont.)
SMEs
• Loan facilities for start-ups and • A VAT exemption on import of machinery
entrepreneurs at 3% interest rate and equipment if amount payable is
Rs150,000 or more.
• Loans of up to Rs3m to planters
engaging in sheltered farming at an • Certification scheme to provide technical
interest rate of 3% with a moratorium on assistance to SMEs
capital repayment in the first year
• An SME Productivity Improvement
• Loans of up to Rs1m to operators of Programme will be launched to offer
organic farms with a moratorium of 2 opportunities to SMEs to have access to
years on capital repayment, depending technicians to review and enhance their
on the project productivity
• Finance lease facilities on import of plant • Setting up of a Foreign Expertise and
and equipment for MSMEs with turnover Technical Assistance Scheme to boost the
up to Rs10m Handicraft sector
• A factoring window will provide quick
working capital to MSMEs
22 | Budget 2018-2019
Agri-Business &
Real-Estate
Olivier Ma
Associate Director Key metrics
T: +230 404 5044
E: olivier.ma@pwc.com
100 additional agricultural
farms to be created
Head of Transactions and specialist in debt
and equity capital markets and M&A advisory
services. Financing
DBM and MauBank to provide farmers
with loans up to Rs3m at 3% interest rate
“Significant measures are Nil income tax for the first 8 years
planned for agricultural
farms and ocean economy. Rs30m
However, the Mauritian Contribution towards a new Crop
Insurance Scheme
sugar industry is left with
uncertainty at a time when Increase in duty on imported sugar
it is at a crossroad. We from 15% to 80%
expected more from the
Budget.” 150 acres of land
A high-tech park at Cote D’Or is planned
No morcellement permit
required under PDS or SCS
23 | Budget 2018-2019
Agri-Business
Real-Estate
Public
Sector
Rajeev Basgeet
Partner Key metrics
T: +230 404 5148
E: rajeev.basgeet@pwc.com
Rs37bn to enhance transport
infrastructure and upgrading of roads
Government and Public Sector Leader,
specialist in restructuring and insolvency Education
matters.
Rs17.2bn - Improvements in the education
infrastructure
Public
Sector (Cont.)
• Phase 1 of Metro Express project set for • CEB will invest Rs1.2bn in underground
completion by September 2019 and the distribution lines
extension of line from Rose Hill to Curepipe
to be operational by September 2021 • Implementation of a waste-to-energy
project
• New airport passenger terminal to be
extended and the passenger terminal • 6 additional solar farms will be
refurbished to accommodate 8.5m commissioned
passengers annually
Public
Sector (Cont.)
Education, Healthcare and Law and Order
Leisure • Rs8.5bn dedicated to enhance the
• Improvements of education infrastructure of capacity of the Police Department to
Rs17.2bn have been budgeted combat crime including intensified
combat against drug trafficking
• Improved accessibility to education for special
needs students • Tougher road safety measures and
Rs875m allocated for the improvement
• The main measures for the health sector of road infrastructure
include the construction of a teaching
hospital, development of a medical hub and • circa. 1,000 additional police officers
setting up of a New Cancer Centre for law and order
• Rs100m will be allocated for implementation • Safe City Project previously announced
of e-Health in last budget will be implemented
Public
Sector (Cont.)
Other measures
• New impetus to the Mauritius-Africa
Fund to enhance our Africa Strategy
Information and
Communications Technology (ICT)
Jean-Pierre Young
Partner Key metrics
T: +230 404 5028
E: jean-pierre.young@pwc.com
Attracting Private
Investments
Advisory Leader, oversees Information Adopt emerging technologies
Security services provided in Mauritius, Africa
and the Middle East. Capacity Building
Laying down the foundation to create
skilled workforce
Implementation of e-
Health
Improve health services
Infrastructure
Strengthen digital infrastructure
Information and
Communications Technology (ICT)
05
Taxation
32 | Corporate Tax
35 | Personal Tax
40 | Other Taxes
41 | Tax Administration
43 | Immigration
32 | Budget 2018-2019
Corporate
Tax
Corporate
Tax (Cont.)
Freeport Regime
• Corporate tax exemption granted to
Freeport operators and Freeport
developers on export of goods will be
removed
34 | Budget 2018-2019
Corporate
Tax (Cont.)
National Regeneration
Scheme (“NRS”)
• NRS is introduced under the Smart City
Regulation
Personal
Tax
Interest relief
• Interest relief is now allowed on secured
property in respect of profit charge payable
under Islamic Financing Arrangement for
house construction
36 | Budget 2018-2019
Personal
Tax (Cont.)
Income Exemption
Threshold
Category From To
(Rs) (Rs)
Value Added
Tax
Value Added
Tax (Cont.)
Other
Taxes
Tax
Administration
General
5% Payment on Objection Refund of Training Costs
• Time limit for determination in cases of • An individual who has submitted his
disagreement with the ATDR Panel starts income tax returns in the last five years
from the date a case is referred back to will not be required to submit such a
the Objection Directorate and not the statement
date that the objection was initially
lodged
Tax
Administration (cont.)
Additional assessment
Islamic Finance
Immigration
Your
Taxation Team
Dheerend Puholoo
Tax Partner
T: +230 404 5079
E: d.puholoo@pwc.com
Feroz Hematally
Senior Manager
T: +230 404 5013
E: feroz.hematally@pwc.com
45 | Budget 2018-2019
06
About PwC
About
PwC
PwC in Mauritius
is recognised as a thought leader and a
change initiator, where more than 300
professional staff combine the
resources of our global network with
detailed knowledge of local issues.
10 5 303
We favour an industry approach to Associate Professional
serve a large number of companies Partners
Directors staff
doing business in Mauritius, ranging
from multinationals, a cross section of
local businesses, to public institutions.
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firm services
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Tax Advisory
Find out more and tell us what matters to you by visiting us at www.pwc.com/mu
47 | Budget 2018-2019
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