Budget 2018-2019

Time to
deliver

www.pwc.com/mu/budget
2 | Budget 2018-2019

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3 | Budget 2018-2019

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

16 Financial Services 32 Corporate Tax

19 Hospitality, Manufacturing & 35 Personal Tax

SME
37 Income Exemption Threshold
22 Agri-business & Real Estate
38 Value Added Taxes
25 Public Sector
40 Other Taxes
29 ICT
41 Tax Administration

43 Immigration
4 | Budget 2018-2019

01

Our
Opinion

Anthony Leung Shing

Tax Leader
PwC Mauritius

T: +230 404 5071

E: anthony.leung.shing@pwc.com
5 | Budget 2018-2019

Time to deliver
Our opinion

The Hon. Pravind Jugnauth, Prime Minister
and Minister of Finance and Economic
Empowerment painted a rather optimistic
picture of the country’s performance, with
some healthy fundamentals. In recent years,
we have been accustomed to projects or
measures being announced but being rolled
over year after year and from one budget to
another. Will this year be any different?
Given that it is the penultimate year of this
Government’s mandate, the pressure to
deliver is mounting. The Government has
resorted to some populist policies and, with
many projects taking shape, it appears that
economy is on the up.
The Government did well to contain its
recurrent expenditure against its initial
estimate and to reduce the recurrent budget
deficit. The delays in public investment has
also meant that the overall budget deficit for
2017-18 was maintained at 3.2% of GDP. The
deficit projection for 2018-19 continues to be
supported by the availability of external grants
and transfer from special funds, while public
sector debt seems to be on a downward trend.
However, the off “balance sheet” financing
being used by the Government means that
certain liabilities remain unrecognised and
masks the country’s real debt position.

GDP growth fell slightly short of “We commend the Government’s

expectations, with the economy growing at effort to work within the existing
3.9% for 2017/18 compared to the initial
forecast of 4.1%. Delays in project fiscal constraints; however, we
implementation continue to constraint should be mindful of its recent
growth; out of the Rs18.8bn of public sector practice to borrow off ‘balance
investment forecasted for 2017-18, only
Rs13.6bn was actually spent. However, the
sheet’ to fund its growth
outlook for 2018-19 seems positive, with a aspirations.”
number of both public and private sector
projects having already started, or are
scheduled to kick start in the year ahead. The
smart cities (Cap Tamarin, Moka, etc.) or
government projects such as the Metro-
Express, A1-M1 bridge, Phoenix interchange
or the sports complex at Cote-d’Or are all
underway.
6 | Budget 2018-2019
Time to deliver
Our opinion (cont.)
There was recent public outcry over the
potential hike in water charges or petrol
prices. If the population expects water 24/7,
then they have to pay. However, the
Government resisted against such an
unpopular measure and has maintained
water cost at its current low price. Further,
with the huge investment in the road
network, a system of free usage will be
difficult to sustain and, unless car owners are
discouraged, there will be little switching
onto the Metro-Express once operational.
In the past, around 27% of the petrol taxes
collected were used to fund road projects,
specifically from the Build Mauritius Fund or
Road Development Authority and financing
through petrol taxes is likely to continue. The
Government again decided to gain popular
support by reducing petrol prices.
At PwC, we estimate that this will cost nearly
Rs1bn to the country and this money could
have been better spent.
In terms of sectorial reforms, the integration
of the global business sector and domestic
economy is welcome and the changes to the
tax framework are necessary to ensure that
Mauritius is not only compliant with
international norms, but also remains
competitive. With sugar prices at its lowest, we
were also expecting some radical
announcements. Whilst the increase in custom
duties to 80% alone may not be enough, this
may help to soften the short-term challenges
while the sector continues to reform and drive
efficiencies. The sector however needs much
more.
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%).

As in previous budgets, the digitalisation of

public services remains an item on the agenda
but we would have liked to see more. Driving
national productivity through digitalisation,
modern infrastructure and re-skilling of the
workforce are key to building a competitive
Mauritius.

Overall, the Government has resisted the

temptation to hike taxes and implemented
some measures to gain popular support.
Whilst we commend the Government’s effort
to work within the existing fiscal constraints,
we should be mindful of its recent practice to
borrow off “balance sheet” to fund its growth
aspirations.
8 | Budget 2018-2019

02

Tax
Perspective

Dheerend Puholoo
Tax Partner
PwC Mauritius

T: +230 404 5079

E: d.puholoo@pwc.com
9 | Budget 2018-2019
Tax
Perspective
The Budget 2018-2019 provides a number of
measures that aim at creating new poles of
economic growth and making Mauritius a
High Income country. Further, in the wake of
the Action Plan on Base Erosion and Profit
Shifting (BEPS Action Plan), the Budget has
brought tax reforms that will comply with the
proposals made by the Organisation for
Economic Co-operation and Development
(OECD).
The Hon. Prime Minister and Minister of
Finance and Economic Development has
continued on his path to reduce the disparity
between the “haves and have nots”. He has
relieved the middle income earners by
creating a new band of taxation, and
taxpayers with earnings of up to Rs650,000
will pay tax at a maximum rate of 10%,
compared to 15% previously. He has also
relaxed the eligibility conditions for the
payment of the negative tax being
administered by the Mauritius Revenue
Authority (MRA).
With the pressure of the OECD to eliminate
harmful tax practices, it was expected that the
Hon. Minister of Finance and Economic
Development would significantly reform our
tax system.
The deemed foreign tax credit will be
abolished and replaced by the concept of an
80% partial exemption on any foreign source
income. This is, however, subject to
companies meeting the substantial activities
requirements as prescribed by the Financial
Services Commission, which is again a
condition under BEPS Action Plan.
“The Budget has addressed to a
large extent the concerns of the
OECD with the tax reforms. We
hope that the proposed measures
will not jeopardise the status of
Mauritius as a competitive platform
for making and routing
investments.”
The Category 2 Global Business regime will be
abolished, but GBC2 Licences issued prior to
16 October 2017 will be grandfathered up to 30
June 2021. Companies with global trading
activities will be taxed at the rate of 3%. The
Freeport regime will also be amended.
Hopefully, these amendments will satisfy the
OECD.
The taxation of banks has also undergone
major reforms. The concept of Segment A and
B will be abolished, and banks will be subject
to a progressive tax rate of 5% and 15%. The
Budget has also introduced an incentive
scheme for banks with chargeable income
exceeding Rs1.5bn to be taxed at the reduced
rate of 5% on meeting certain conditions. The
real impact can only be assessed once those
conditions are established. Hopefully, banks
which already contribute significantly to the
coffers of the MRA will not be penalised by
this new measure. The special levy will be
administered under the VAT Act as from 01
July 2019, which means faster cash for the
MRA.
10 | Budget 2018-2019

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.

The submission of a statement of assets and

liabilities will not be required for taxpayers
who have duly submitted their tax returns
during the last five years. This will relieve
honest taxpayers from the tedious exercise of
submitting the statement of assets and
liabilities.
11 | Budget 2018-2019

03

Public
Finance

Jill Wan
Senior Manager
PwC Mauritius

T: +230 404 5012

E: jill.wan@pwc.com
12 | Budget 2018-2019

Public
Finance

Budget Deficit and Growth Rate

The 2017/2018 budget deficit as a
Budget Deficit & Growth Rate
percentage of GDP was in line with last
25 4.5%
year’s forecast of 3.2%. 3.9%
4.1%
4.0%
3.9%
Government now expects a sustained 20
3.4%
3.5%
3.5%
3.5% 3.5% 3.5%
rate of 3.2% for 2018/2019, on the 3.2% 3.4%
3.2% 3.2%
3.0%
3.2%
basis of a Rs10.6bn increase in 15
15.9 15.9 15.4
16.3
2.5%
Revenues (+9.9%) offset by a Rs11.5bn
12.8 12.6 2.0%
increase in Expenditure (+9.4%). 10 1.8%
1.5%

The 2017/2018 GDP growth rate has 5 1.0%

6.1
also remained at the 2016/2017 rate of 0.5%
3.9%, thus falling short of the last 2 0 0.0%
years’ forecast of 4.1%. Rs.bn
Actual Actual Actual Actual Actual Actual Budget
2012 2013 2014 2015/16 2016/17 2017/18 2018/19

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)

300 265 mainly on account of a Rs7bn increase in

237 237 244
250
domestic debt to Rs244bn with foreign debt
175
70% remaining stable at Rs59bn.
200 160 66% 66%
152
63%
The public debt to GDP ratio is line with last
150 63%
62%
60%
year’s forecast of 63.0% given the faster GDP
100
57%
59% growth.
50
57 63 59 59 59 58 For 2018/2019, debt is expected to rise further
46
- 50% to Rs323.4bn but with the Debt to GDP ratio
Actual Actual Actual Actual Actual Actual Budget
2012 2013 2014 2015/16 2016/17 2017/18 2018/19 being contained at a lower 63.1% on account of
Domestic debt
the further GPD growth of 7.5% compared to
External debt
Public Sector Gross Debt as % of GDP public debt growth of 7.0%.
13 | Budget 2018-2019

Public
Finance (cont.)

Government revenues and

expenditure
Revenue

• Revenue for 2017/2018 is estimated at

Rs106.8bn (4.8% lower than the forecast for
that year).
• Revenue for 2018/2019 is expected to grow by
+9.9%
E
9.9% to reach Rs117.4bn. Rs117.4bn
growth
• This growth is expected to be driven mainly by
a buoyant 9.4% increase in revenue from VAT,
a 15.2% forecasted growth in income tax from
corporate bodies and a 38.8% rise in external Revenues
grants (including Rs6.6bn from the Indian
Government and Rs1.1bn from the Chinese
Government).

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

Personal Compensation • Compensation of Government

Income Tax Rs31.4bn
Rs26.1bn
Rs23.8bn
Rs29.5bn
of Employees employees also witnesses a 6.5% rise,
Budget Size with recruitment of additional public
Rs22.4bn Rs133.8bn servants.
Customs Duty Rs21.4bn Rs122.3bn Rs28.9bn
& Excise Duty Rs24.9bn
Other • Capital Expenditure is expected to
Expenses
increase by Rs2.2bn or +14.0% over
Grant & Other 2018/2019, mainly driven by a
Revenues Rs3.3bn increase in the Acquisition of
Subsidies &
Property & Grants Non-Financial assets.
Other Taxes Capital
Deficit Expenditure
Estimate 2018/19
Revised estimates 2017/18
14 | Budget 2018-2019

04
Sector
Reviews

16 | Financial Services

19 | Hospitality, Manufacturing & SME

22 | Agri-Business & Real Estate

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.

Financial Services – 47% Real Estate – 87.5%

Hospitality– 43% Public Sector – 50%

ICT – 90% SME – 80%

Manufacturing – 90%

Retrospectives in videos:

John Li, Jean-Pierre Young, Olivier Rey,

speaks about Financial speaks about Information speaks about
Services and Communications Manufacturing and
Technology (ICT). Hospitality
16 | Budget 2018-2019

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

“Important and necessary
reform of the global business
sector.”
January 2019
No new Category 2 Global Business licence
will be issued from that date
Fine of up to Rs1m
For non compliance with Bank of
Mauritius guidelines or for breach of
confidentiality of client information

Special levy on banks

Maintained up to June 2019
17 | Budget 2018-2019
Financial
Services (cont.)
Global Business sector
• A new harmonised fiscal regime for
domestic and Global Business
Companies
• The Deemed Foreign Tax Credit regime
for Category 1 Global Business Licence
companies will be abolished as from 31
December 2018
• A partial exemption regime whereby
under certain conditions, 80% of
specified income will be exempted from
income tax
• No new Category 2 Global Business
licence will be issued from January 2019
and companies existing under this
regime prior to 16 October 2017 will be
phased out by 30 June 2021
• Enhanced substance requirements for
entities holding a Global Business
Licence
• Development of an equivalence
framework with other key jurisdictions
• Collaboration with the OECD for hosting
a Regional Centre for capacity building
and best practices to combat financial
malpractices
Banks
• The Deemed Foreign Tax Credit regime
available to banks will be replaced by a new
specific tax regime as from 01 July 2019
• No distinction between Segment A and
Segment B and new tax rates introduced
for banks. Chargeable income of Rs1.5bn
will be taxed at 5% and above this
threshold, a tax rate of 15% will apply
• Banks with chargeable income in excess of
Rs1.5bn will be taxed at 5% if pre-defined
conditions are satisfied
• Special levy on banks is maintained up to
June 2019 and thereafter replaced with a
special levy under the Value Added Tax Act
that will be charged on net operating
income
• Fine of up to Rs1m to financial institutions
failing to comply with the guidelines issued
by the Bank of Mauritius
• Fine of up to Rs1m for disclosure of bank
customers confidential information.
• Private banking business in Mauritius
allowed to import gold and other precious
metals
18 | Budget 2018-2019

Financial
Services (cont.)

Non-bank deposit taking Combating money-laundering

institution
• Minimum capital of Rs200m, net of
accumulated losses, will be maintained
FinTech development
• Setting up of a National Regulatory
Sandbox License (RSL) Committee
• New licencing activities, such as
custodian of digital assets and digital
assets market place
• Guidelines on investment in crypto
currency will be issued
and terrorist financing
• The Financial Intelligence and Anti-Money
Laundering Act will be amended to impose
sanctions for failure to comply with Bank of
Mauritius guidelines for the prevention of
money laundering and terrorism financing
• In line with the Fintech development, the
regulatory framework against money-
laundering and terrorist financing will be
harmonized
Blueprint for the Financial
Services sector
• Blueprint for the sector completed

• Setting up of a steering committee for a

timely and effective implementation
Amendment to the Companies
Act
• Fine of up to Rs100,000 and
imprisonment of up to 1 year for failure
by directors to disclose interest in a
transaction or a proposed transaction
with the company

Amendment to the Financial

Reporting Act
• Sanctions to Audit Firms, Licensed
Auditors and Public Interest Entities
failing to comply with the requirements
of the Act
19 | Budget 2018-2019

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

“Not enough to meet the 3

The number of new business parks that
expectations of the local will be set up.
manufacturing sector.”
60% to 75%
The increase in refund of training cost
applicable to SMEs

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
• New business parks will be set up across
the island including a high-tech park at
Côte-d'Or, a logistic park at Riche Terre
and a pharmaceutical and life sciences
park at Rose Belle
• 5-year tax holiday for Mauritian
companies collaborating with the
Mauritius Africa Fund for the
development of infrastructure in Special
Economic Zones
• Setting up of a loan guarantee facility to
support cross border investment within
the Africa Strategy
• Preferential access of our products on the
UK market will be maintained until end
of 2020
• Streamlining the procedures for work
permit applications for foreign workers
Hospitality
• Mahebourg will be promoted as a ‘Village
Touristique’ and major cultural site, with
sustainable tourism attractions
• New digital platforms will be set up and
used as the preferred means of providing
information to tourists and promoting the
island
• Two new aircrafts will increase capacity
and flight frequency while expanding
destination network
• Construction of a dedicated cruise terminal
building and modern facilities at Port-
Louis Harbour
• All pleasure crafts will mandatorily be
equipped with an Automatic Identification
System to improve safety at sea
21 | Budget 2018-2019
Hospitality,
Manufacturing & SME (Cont.)
SMEs
• Loan facilities for start-ups and
entrepreneurs at 3% interest rate
• Loans of up to Rs3m to planters
engaging in sheltered farming at an
interest rate of 3% with a moratorium on
capital repayment in the first year
• Loans of up to Rs1m to operators of
organic farms with a moratorium of 2
years on capital repayment, depending
on the project
• Finance lease facilities on import of plant
and equipment for MSMEs with turnover
up to Rs10m
• A factoring window will provide quick
working capital to MSMEs
• A VAT exemption on import of machinery
and equipment if amount payable is
Rs150,000 or more.
• Certification scheme to provide technical
assistance to SMEs
• An SME Productivity Improvement
Programme will be launched to offer
opportunities to SMEs to have access to
technicians to review and enhance their
productivity
• Setting up of a Foreign Expertise and
Technical Assistance Scheme to boost the
Handicraft sector
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
planned for agricultural
farms and ocean economy.
However, the Mauritian
sugar industry is left with
uncertainty at a time when
it is at a crossroad. We
expected more from the
Budget.”
Nil income tax for the first 8 years
Rs30m
Contribution towards a new Crop
Insurance Scheme
Increase in duty on imported sugar
from 15% to 80%
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
Agricultural farms
• 100 additional farms will be created on a
Ready-To-Operate basis over the next two
years
• The Development Bank of Mauritius and
MauBank will provide finance of up to
Rs3m at 3% interest, with a moratorium
on capital repayment in the first year
• All income derived will be exempted from
tax for the first 8 years
• A grant of up to Rs10,000 will be given
under the Mini Sheltered Farming Scheme
to eligible families
• Operators of organic farms will be offered
loans of up to Rs1m with a moratorium of
2 years
• A land data bank will be created to map all
abandoned agricultural lands
Food Security Programme
• Rs30m contribution towards a new Crop
Insurance Scheme for planters
• Subsidy on the production of onion and
potato seeds will be increased
• A National Animal Identification System
will be set up.
Tea industry
• A monthly income support of 50 cents per
kilo of tea leaves harvested during the
winter period
Sugar Industry
• Setting up of a ministerial committee to
come up with an appropriate action plan
• Increase in customs duty on import of
sugar from 15% to 80%
• Government will meet the shortfall arising
from the suspension of CESS payments for
crop 2018
• An amount equivalent to the insurance
premium payable by planters with up to 60
tons of sugar accrued will be made available
to the Sugar Insurance Fund Board
Ocean economy
• Setting up of an Ocean Economy Unit
which will prepare a National Ocean Policy
Paper
• An Ocean Observatory e-platform will be
developed to support the Marine Spatial
Planning Initiative of Mauritius
• A geotechnical study will be conducted in
the Mascarene region
• A Group Life Insurance Scheme for
registered fishermen
• Foreign fishing companies will be allowed
to fish in the shallow water banks provided
they sell all their catch on the local market
• A grant will be provided for the acquisition
of outboard engines and fishing nets of up
to Rs60,000
24 | Budget 2018-2019
Real-Estate
Business parks
The following business parks will be set up:
• A high-tech park at Côte D’Or extending
over 150 acres of land;
• A logistic park at Riche Terre; and
• A pharmaceutical and life sciences park
at Rose Belle
Morcellement
• The granting of morcellement permit will
be reviewed with a provision for a Drain
Impact Assessment
• The legal framework will be amended to
allow for pulling down of illegal
constructions
• The Morcellement Act will be amended
to:
− eliminate the requirement for the
submission of a Preliminary
Environment Report when applying for
a morcellement permit;
− provide that the Morcellement Board
may, within 2 weeks of receipt of an
application, make only one written
request for additional information; and
− provide that an excision or a
morcellement under the Property
Development Scheme or the Smart City
Scheme will not require a morcellement
permit
Loans
• All restrictions on limits on loans from
commercial banks will be removed for
residential or business purposes.
National Regeneration
Scheme (“NRS”)
• NRS is introduced under the Smart City
Regulation
• Property developer will be eligible to
investment income tax credit of 5% over 3
years on qualifying capital expenditure on
substantial work in relation to existing
buildings if completed within 2 years
from date of approval
• 5 year tax holiday on income derived from
smart parking solutions and other green
initiatives
• 2 year tax exemption on newly rented
space for cultural purposes or to artists as
from date plan is approved
• Expenditure made by private companies
on renovation, embellishment or cleaning
of public infrastructure will be tax
deductible
25 | Budget 2018-2019

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

Rs14.1bn for the construction and

“Increased focus to
rehabilitation of circa. 9,800 social
consolidate existing Public housing units.
Infrastructure and new
projects to enhance our Rs8.5bn to strengthen Law and
potential.” Order system

Rs3.3bn to upgrade water

infrastructure and commitment for
24/7 water supply
26 | Budget 2018-2019

Public
Sector (Cont.)

Public Infrastructure Utilities

• Rs37bn earmarked to enhance transport
infrastructure and upgrading road networks
over next 3 years
• Rs5.6bn will be allocated for the
implementation of 1,178 NDU projects
including upgrading of drains and
secondary roads
• Rs3.3bn to upgrade the water
infrastructure over the next 3 years,
including the construction of a water
treatment plant at Bagatelle
• Commitment to deliver water supply on
24/7 whilst maintaining the current
water tariffs

• Phase 1 of Metro Express project set for
completion by September 2019 and the
extension of line from Rose Hill to Curepipe
to be operational by September 2021
• New airport passenger terminal to be
extended and the passenger terminal
refurbished to accommodate 8.5m
passengers annually
• CEB will invest Rs1.2bn in underground
distribution lines
• Implementation of a waste-to-energy
project
• 6 additional solar farms will be
commissioned

• National Regeneration Scheme to rejuvenate

central areas of city, towns and large villages

• Rs1.2bn will be provided for Local

Government Projects and fire services

• Rs2bn earmarked for the National

Environment Fund to enhance resilience
against climate change-related calamities

• Rs3bn to be invested for the construction of

breakwaters, fishing port and a dedicated
cruise terminal

• Rs160m will be allocated to construct a Civil

Service College

• Other major projects include setting up of 3

business parks, construction of urban
terminals and road decongestion
programme
27 | Budget 2018-2019

Public
Sector (Cont.)
Education, Healthcare and
Leisure
• Improvements of education infrastructure of
Rs17.2bn have been budgeted
• Improved accessibility to education for special
needs students
• The main measures for the health sector
include the construction of a teaching
hospital, development of a medical hub and
setting up of a New Cancer Centre
Law and Order
• Rs8.5bn dedicated to enhance the
capacity of the Police Department to
combat crime including intensified
combat against drug trafficking
• Tougher road safety measures and
Rs875m allocated for the improvement
of road infrastructure
• circa. 1,000 additional police officers
for law and order

• Rs100m will be allocated for implementation • Safe City Project previously announced
of e-Health in last budget will be implemented

• Rs683m will be provided to promote • A new Court House Tower in Curepipe

importance of sports • Rs49m has been allocated for
upgrading of District courts and
Employment improvement of the E-Judiciary system
• Rs1bn has been targeted to address youth
unemployment

• The Work@Home Scheme will be introduced

to increase productivity and to encourage
more women to work

• To bridge skills gap more quickly, work

permit applications for talent workers will be
processed within 5 days

• 150 additional workers for the 24/7 operation

basis of the port

• 344 firefighters and officers will be recruited

to enhance the resilience of Mauritius against
climate change-related calamities

• 150 primary educators and 114 secondary

educators will be recruited

• 107 additional medical officers

28 | Budget 2018-2019

Public
Sector (Cont.)

Other measures
• New impetus to the Mauritius-Africa
Fund to enhance our Africa Strategy

• Mauritian citizenship through non-

refundable contribution to a Mauritius
Sovereign Fund managed by Mauritius
National Investment Authority

• Mauritian citizenship upon non-

refundable contribution of $1m and
$100,000 for each additional member of
family

• Mauritian passport upon contribution of

$500,000 and $50,000 for each
additional member of family

• Budget of Rs5bn for the sustained socio-

economic development of Rodrigues

• Rs14.1bn for the construction and

rehabilitation of circa. 9,800 social
housing units
29 | Budget 2018-2019

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

“No game changing Fintech

Provide regulatory environment
measures to fuel up the
innovation…”
Digital tourist guide
Improve visitors experience

Implementation of e-
Health
Improve health services

Infrastructure
Strengthen digital infrastructure

Work from home

Promote flexibility
30 | Budget 2018-2019
Information and
Communications Technology (ICT)
Attracting Private investments
• Development of a new growth pole around
Artificial Intelligence (AI), blockchain and
Fintech
• Setting up of Mauritius Artificial
Intelligence Council (MAIC) to drive AI
related activities
• Setting up of a Steering committee to
ensure coherence in digitisation of public
sector services
• Special electricity rate to accredited data
centre operators
Capacity Building
• New annual scholarship scheme for 50
students in digital technologies
• Double the intake of students in Computer
Science and Software Engineering at
University of Mauritius
• Coding training for students in primary
and secondary schools
Fintech
• Set up of a National Regulatory Sandbox
Committee
• Create a Custodian of Digital Assets and a
Digital Marketplace license by the
Financial Services Commission
• To put in place guidelines in crypto
currency investments
Digital tourist guide
• New digital platform will be created to
enhance visitors experience
Implementation of e-Health
• Rs 100m for digitalisation of hospitals to
improve health services
Infrastructure
• Implement an Anti-Cyber Threat
Monitoring System to better respond,
monitor and coordinate cyber-threats at
the national level
• Construction of a Technology Park in
Rodrigues to promote employment
• Setting up of a new certification
authority for issuance of digital
signatures
• Setting up of a Disaster Recovery Site at
Government Online Centre
Work from home
• Double deduction from tax, of the wage
and salary costs of employees for first
two years
• Tax incentive to employers under the
Work@Home scheme with an annual tax
credit of 5 percent for three years on the
required IT investment
31 | Budget 2018-2019

05
Taxation

32 | Corporate Tax

35 | Personal Tax

37 | Income Exemption Threshold

38 | Value Added Taxes

40 | Other Taxes

41 | Tax Administration

43 | Immigration
32 | Budget 2018-2019
Corporate
Tax
Global Business
• Abolition of Deemed Foreign Tax Credit
(“FTC”) regime available to companies
holding a Category 1 Global Business
Licence (“GBC1) as from 31 December
2018
• Partial exemption regime for companies
(except banks) whereby 80% on specified
income such as foreign source dividends,
interests, royalties and other income
from specified financial services will be
exempted from income tax
• Partial exemption regime available upon
satisfaction of pre-defined substance
requirements of the Financial Services
Commission (“FSC”)
• Category 2 Global Business Licence
(“GBC2”) will be abolished as from
January 2019
• Grandfathering of companies holding
GBC2 issued before 16 October 2017
until 30 June 2021
Reduced Corporate Tax Rate
• Corporate tax rate of 3% to companies
engaged in export of goods will be
extended to companies involved in global
trading activities
Taxation of banks
• Abolition of deemed FTC regime available
to banks as from 1 July 2019
• Introduction of new regime with no
distinction between Segment A and
Segment B income. Banks will be taxed as
follows:
Chargeable Income Tax Rate
Up to Rs1.5bn 5%
Above Rs1.5bn 15%
• Banks with chargeable income in excess of
Rs1.5bn will be taxed at 5% if pre-defined
conditions are satisfied
• Special levy on banks is maintained up to
June 2019
Investment Tax Credit
• Companies importing goods in semi
knocked down form to benefit from an
investment tax credit of 5% over 3 years
(up to 30 June 2020) on acquisition of
new plant and machinery excluding motor
cars, subject to a local value add of at least
20%
• Tax credit will be available on investments
up to 30 June 2020
33 | Budget 2018-2019

Corporate
Tax (Cont.)

Solidarity Levy on telephony Sheltered Farming Scheme

service providers • 8 year tax exemption on farming related
• Solidarity levy on telephony service projects
providers is extended up to June 2020

• Removal of condition for Solidarity levy Corporate Social

to apply to companies having a book
profit exceeding 5% of their turnover
Taxation of artworks
• Companies not engaged in the artworks
business will be allowed to deduct cost of
artworks bought from a local artist up to
maximum of Rs500,000, provided the
artwork is displayed in the place of
business, can be seen by the public and
the artworks are kept for at least 3 years
Responsibility (“CSR”)
• For CSR funds set up on or after January
2019, companies are allowed to retain an
additional 25% of the fund, upon approval
of the National CSR Foundation for
programmes that started prior to January
2019
• Unused foreign tax credit will not be
allowed to be offset against CSR payable
• Companies on tax holidays will be required
to contribute to CSR

Tax Holiday on Africa Project Work@Home Scheme

• 5 year income tax holiday for project
developers and project financing
institutions collaborating with the
Mauritius Africa Fund for the
development of infrastructure in Special
Economic Zones
• Double deduction for wages and salary
costs of employees under the Work@Home
Scheme for the first 2 years
• Annual tax credit of 5% to employers for
the first 3 years on investments in required
IT system under the scheme

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

• Property developer will be eligible to

investment income tax credit of 5% over
3 years on qualifying capital expenditure
on substantial work in relation to
existing buildings if completed within 2
years from date of approval

• 5 year tax holiday on income derived

from smart parking solutions and other
green initiatives

• 2 year tax exemption on newly rented

space for cultural purposes or to artists
as from date plan is approved

• Expenditure made by private companies

on renovation, embellishment or
cleaning of public infrastructure will be
tax deductible
35 | Budget 2018-2019
Personal
Tax
Tax band of 10%
• Tax rate reduced from 15% to 10% on
annual net income derived by an
individual of up to Rs650,000
Exempt Income
• Lump sum received exemption threshold
on severance allowance, pension or
retiring allowance increased from Rs2m
to Rs2.5m
• Exemption on Insurance Industry
Compensation Fund
Taxation of artists
• Mauritius artist earning less than
Rs300,000 can get deduction of 50%
from his artistic work earnings without
the need of supporting documentation
for expenses
Exemptions and Reliefs
Additional deduction for tertiary
education
• Additional deduction for pursing tertiary
education increased –
• From Rs135,000 to Rs200,000 for
dependent child studying abroad
• From Rs135,000 to tuition fees in excess of
Rs135,000 up to Rs170,000 for dependent
child studying in Mauritius
Income Exemption Threshold for
Retired Person
• Income Exemption Threshold is now
available to retired person deriving
emoluments not exceeding Rs50,000
Rain Harvesting Investment Allowance
• Individuals investing in rainwater
harvesting system (including consultancy
and design, earthworks, gutters and
specialised water tanks) for their house can
deduct amount invested from their taxable
income
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.)

Negative Income Tax

Conditions for financial support granted to
low income employees earning Rs9,900 or
less monthly changed as follows –

• Allowance computed on monthly basic • Compliance with NPF and NSF

salary instead of total earnings, limited to
monthly total earnings up to Rs20,000
• Condition to be in full-time employment
changed to a minimum of 24 hours over
at least 3 days on a week
• No requirement for an employee to be in
continuous employment for the past 6
months
• Aggregate monthly income of employee
and spouse not exceeding Rs30,000
changed to monthly income not
exceeding Rs9,900 and Rs30,000 for
employee and spouse respectively
contribution will be for the month Negative
Income Tax is claimed instead of all prior
NPF and NSF contributions made to date
• No requirement for full time employee to
compulsorily register for Negative Income
Tax as information will be provided by
employer in monthly PAYE, NPF and NSF
returns.
• MRA will pay allowance to employee
within 1 month from the date employer
files PAYE, NPF and NSF returns
37 | Budget 2018-2019

Income Exemption
Threshold

Effective as from income year

starting on 01 July 2018

Category From To
(Rs) (Rs)

A. Individual with no dependent 300,000 305,000

B. Individual with one dependent 410,000 415,000

C. Individual with two dependents 475,000 480,000

D. Individual with three dependents 520,000 525,000

E. Individual with four or more dependents 550,000 555,000

F. Retired/Disabled person with no dependent 350,000 355,000

G. Retired/ Disabled person with dependents 460,000 465,000

38 | Budget 2018-2019

Value Added
Tax

VAT Refund Scheme Burglar alarm systems

• VAT refund to planters extended to the • Services relating to upgrading, repairs
following: and maintenance, patrol and monitoring
or rental of burglar alarm system will be
 Branch chopper zero rated supplies
 Earth auger

 Fogging machine Public buses

 Handy blower • VAT exemption extended to cover bus
bodies built on chassis for all buses meant
 Irrigation hose
for public transport
 Mini tiller, including blade

 Land preparation works; and Examination of vehicles

 Rental of land leased for (Fitness)
agricultural purposes
• Fees payable for fitness of vehicles will
• Registered local artists will benefit from remain zero rated for another two years
VAT refund on musical instruments up to 30 June 2020
including guitar, drum set, dhol, flute
and violin
Photovoltaic system
Supply of manual labour in • All components forming an integral part
of photovoltaic system will be zero rated
Agricultural or Construction
Sector
• Supply of manual labour to VAT
registered person in construction or
agricultural sector will be exempt from
VAT
39 | Budget 2018-2019

Value Added
Tax (Cont.)

Recovery of VAT in Claw Back of VAT on Capital

Hospitality Sector
• VAT paid by registered person involved
in accommodation, catering,
entertainment or rental/lease of motor
vehicles businesses can be recovered
Goods
• MRA will be empowered to claw back
refund made on capital goods (excluding
building) exceeding Rs100,000 in case of
abuse

Watch straps National Regeneration

• VAT will be abolished on watch straps
except those made of precious or base
metal
Anti-Smoking tablets
• VAT exemption extended to anti-
smoking tablets
Scheme
• Property developer qualified under the
above scheme will be eligible to VAT
refund on renovation work on existing
buildings including capital goods,
professional fees and fit-out works on
completed work within 2 years from date
of approval

Special Levy on banks

• Special levy on net operating income
derived by banks from domestic
operations
40 | Budget 2018-2019
Other
Taxes
Freeport Regime
• Freeport operators and private operators
will no longer be exempted from
corporate tax on export of goods
• Companies with a Freeport certificate
issued before 14 June 2018 will continue
to be exempted until 30 June 2021
• Manufacturing activities will not be
allowed in the Freeport
Income Tax Winnings
• Introduction of withholding tax of 10%
on winning amount exceeding
Rs100,000 obtained from Mauritius
National Lottery – ‘Lotto’ and
Government Lotteries – ‘Loterie Verte’,
casinos and gaming houses
National Regeneration
Scheme (“NRS”)
• Under NRS:
Property developers will benefit from
customs duty on import of:
 construction materials,
 machinery,
 equipment and other inputs in semi
knocked down form
on the condition that at least 20% local
value add on substantial work on
existing buildings if it is completed
within 2 years from date of approval
Customs Duty
• Goods imported in Semi-Down condition
will be exempted from customs duty,
provided there is at least 20% value
addition domestically
• 15% customs duty on acoustic doors and
10% customs duty on iron bars will be
abolished
• 10% customs duty on imported blended
oil
• Increase of custom duty from 15% to 80%
on import of sugar
• Foreign retirees will be exempted from
custom duties on import of personal effect
up to a value of Rs2m
Excise Duty
• 100% duty exemption on motorcar up to
1,600cc for disabled persons
• 100% duty exemption on purchase of
single/double space cabin vehicle for
planters in hydroponic activities
• Excise duty of Rs2 per unit on non-
biodegradable disposable plastic
containers as from 1 February 2019
• Excise duty on buggies adjusted to 10%
• Road tax of Rs4,000 will be extended to
include farmers engaged in sheltered
farming, poultry breeders and growers of
fine herbs on commercial sale
41 | Budget 2018-2019

Tax
Administration

General
5% Payment on Objection Refund of Training Costs

• An additional 5% of tax payable when • Refund of training costs will be increased

appealing before 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 Rs100,000
Expeditious Dispute Resolution of Tax
Scheme (“EDRTS”)
• EDRTS will be extended to assessments
raised from 1July 2015 to 30 June 2016
Alternative Tax Dispute Resolution
(“ATDR”)
from 60% to 70%
• For Small and Medium Enterprises
(“SMEs”), the refund will increase from
60% to 75%
Personal Taxation
Statement of Assets and Liabilities by
High Net Worth Individuals
• Individuals who derive income exceeding
Rs15m or own assets costing more than
Rs50m must submit a statement of assets
and liabilities with his income tax return
for the income year starting 1 July 2017

• Time limit for determination in cases of
disagreement with the ATDR Panel starts
from the date a case is referred back to
the Objection Directorate and not the
date that the objection was initially
lodged
• An individual who has submitted his
income tax returns in the last five years
will not be required to submit such a
statement

• This principle will apply to assessments

raised by the MRA under the Gambling
Regulatory Authority Act

Efficient Recovery of Arrears of

Revenue

• Mauritius Revenue Authority Act will

provide for enforcement actions
regarding arrears of revenue to expedite
recovery of debts
42 | Budget 2018-2019

Tax
Administration (cont.)

Corporate Tax Value Added Tax (“VAT”)

Tax Deduction at Source (“TDS”)
• TDS will be applied on ‘commission
payment’ at the rate of 3%
• TDS on rent paid to non-residents
increased from 5% to 10%
• No TDS on director fees
Exchange of information with other
countries
• Penalties will be imposed on a person
who fails to furnish information needed
for automatic exchange of information
with other countries
• No VAT on the importation of capital goods
exceeding Rs150,000 will be paid by VAT-
registered persons but they will be required
to declare the imports on their VAT returns
• Consolidated list of the taxable supplies
submitted electronically will now be
submitted invoice-wise instead of taxpayer-
wise
• Penalties will be introduced to deter
misuse of or tampering with an Electronic
Fiscal Device

Additional assessment

• Provisions regarding amended

assessments will be reviewed

• Objection and appeal procedure will be

set out for any additional assessment
raised by the MRA

Islamic Finance

• Income tax exemption on interest

income received from debentures and
quoted bonds will be extended to returns
from sukuks
43 | Budget 2018-2019

Immigration

Occupation permit (OP) Mauritian Citizenship and

Applications
• Applicants will pay the processing fees
upon the approval of their permit instead
of paying at the time of submission of the
application
• OP applications falling under the Foreign
Manpower Scheme will be processed
within 5 days and the employer will pay a
contribution equivalent to 1 month salary
Passport
• The Economic Development Board (EDB)
will provide two schemes to attract high
net worth foreigners through contribution
made to a Mauritius Sovereign Fund
• Mauritian Citizenship against a non-
refundable contribution of USD1m for the
main applicant and an additional
USD100,000 for each dependent

• Mauritian passport against a non-

refundable contribution of USD500,000
Work permit (WP)
for the main applicant and an additional
Applications USD50,000 per passport for each
dependent
• Incomplete applications will not be
entertained and will be treated as
‘missing documents cases’

• The ratio of local workers to expats will

be reviewed for some sections

• Companies employing less than 20

individuals will not be required to
advertise jobs in the press. The
Employment Information Center will
facilitate the process

• Penalties will be applicable for late

applications of WP/renewal

• Payment for WP fees will be extended to

30 days
44 | Budget 2018-2019

Your
Taxation Team

Anthony Leung Shing

Tax Leader
T: +230 404 5071
E: anthony.leung.shing@pwc.com

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

At PwC, our purpose is to build trust in society and

solve important problems.

We’re a network of firms in 158 countries with more

than 236,000 people who are committed to
delivering quality in assurance, advisory and tax
services.
46 | Budget 2018-2019

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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Internal Audit
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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