On 4 June 2020, the Mauritius Minister of Finance, Economic Planning, and Development, Renganaden Padayachy, delivered the 2020-2021 Budget speech in parliament. Some of the main tax-related measures of the Budget are summarized as follows.
Individual Income Exemption Thresholds
The individual income exemption thresholds will be increased by amounts ranging from MUR 15,000 to MUR 80,000, resulting in the following thresholds from 1 July 2020 depending on taxpayer category:
The Solidarity Levy currently levied at a rate of 5% on resident individuals having chargeable income plus dividends in excess of MUR 3.5 million in a year will be increased to 25% for 2020-2021 on chargeable income plus dividends in excess of MUR 3.0 million. Lump-sum income received by a person by way of commutation of pension, death gratuity, or as compensation for death or injury is excluded from the computation of the Solidarity Levy. The Pay As You Earn (PAYE) system will apply to the Solidarity Levy.
New Contribution Sociale Généralisée
The National Pension Fund is being abolished and replaced with a new system, the Contribution Sociale Généralisée, with effect from 1 September 2020. Under the new system, employees earning up to MUR 50,000 per month will contribute 1.5% and their employers will contribute 3% on monthly salary. Employees earning more than MUR 50,000 per month will contribute 3.0% and their employers will contribute 6%.
Several investment incentives are provided:
Income Tax Holiday
Tax holiday measures include the following:
Accelerated depreciation measures include:
Solidarity Levy on Telephony Service Providers
The Solidarity Levy on telephony service providers (5% of accounting profit + 1.5% of turnover), which was introduced in 2009 and subsequently extended, will be made permanent. A profitable company will pay 5% of its accounting profit and 1.5% of its turnover as Solidarity Levy. A company that has not made profits will pay 1.5% of its turnover as Solidarity Levy.
Alternative Minimum Tax on Companies Carrying on Life Insurance Business
A company carrying on 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.
Partial Exemption Regime
For the avoidance of doubt, it will be clarified that the partial exemption regime on interest income does not cover:
Levy on Corporates
A company, having gross income exceeding MUR 500 million in an accounting year or if it forms part of a group of companies where the gross income of the group exceeds MUR 500 million, will be subject to a levy on its annual gross income at the rate of:
The levy will not apply, however, to a company that operates in the tourism sector or holds a Global Business License.
Reduced Exemption Value for Imported Goods
Presently, the first MUR 3,000 of the value of an article imported by post or courier services is exempt from customs duty and VAT. This exemption value will be reduced to MUR 1,000.
Excise Duty on Sugar Sweetened Products
The existing sugar tax of 3 cents per gram on sugar sweetened beverages will be doubled with effect from 5 June 2020. In addition, the tax of 6 cents per gram of sugar will be extended to several locally manufactured and imported non-staple sweetened products with effect from 1 November 2020. Excise regulations will also be amended to license importers and manufacturers of sugar sweetened products as in the case of sugar sweetened beverages.
VAT Exempt Supplies to become Zero-Rated
Several VAT exempt supplies will become zero-rated, including:
VAT on Digital and Electronic Services
Digital and electronic services provided through the internet by non-residents for consumption in Mauritius will be made subject to VAT.
Various tax administration changes and clarifications will be made, including:
Click the following link for the Mauritius Budget 2020-2021 webpage for more information.