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Mauritius 2022-2023 Budget Delivered — Orbitax Tax News & Alerts

On 7 June 2022, the Mauritius Minister of Finance, Economic Planning, and Development, Renganaden Padayachy, delivered the Budget Speech 2022-2023. Some of the main tax-related measures of the Budget are summarized as follows:

  • The annual individual income tax brackets/rates will be amended as follows, including a new rate of 12.5%:
    • up to MUR 700,000 - 10%
    • over MUR 700,000 up to MUR 975,000 - 12.5%
    • over MUR 975,000 - 15%, plus the solidarity levy if applicable
  • The Income Tax Act will be amended to cater for any change that may be required in connection with the introduction of a domestic minimum top-up tax, applicable to companies resident in Mauritius forming part of MNE groups with global annual revenue of EUR 750 million or more, to ensure that they are taxed at the global minimum rate of 15%;
  • The rate of tax deduction at source (TDS) on:
    • services provided by professionals will be increased from 3% to 5%; and
    • rent paid to a resident will be increased from 5% to 7.5%;
  • The scope of TDS will be expanded to cover:
    • consultancy fees - 3%
    • security services and cleaning services - 3%
    • pest management services - 3%
    • payment of fees made by insurance companies to motor surveyors and mechanics for repairs of motor vehicles of policyholders - 3%
  • The halving of the rate of tax on the transfer of leasehold rights in State land (from 20% to 10% - 5% buyer and 5% seller) for hotels built on State lands will end on 30 June 2023 as announced in the Budget Speech 2021-2022;
  • Various excise duty amendments will be made, including the implementation of an excise duty at the rate of 6 cents per gram of sugar on locally manufactured and imported non-staple sweetened products with effect from 1 July 2025;
  • An 8-year income tax holiday will be granted to a newly set up freeport operator or developer making an investment of at least MUR 50 million, provided that the freeport operator/developer:
    • starts its operations on or after 1 July 2022; and
    • conforms with the substance requirements set by the OECD;
  • The 10% additional deduction for amounts incurred by large manufacturers to purchase locally manufactured products from a small enterprise will be increased to a 25% additional deduction;
  • Rules for deeming the transfer of plant, machinery, or industrial premises to a related company as transferred at its net value (after allowing for depreciation under the Income Tax Act) will be extended to cover any asset that is subject to depreciation;
  • The Income Tax Act will be amended to implement government decisions:
    • to waive penalties imposed on SMEs, remaining outstanding as on 25 March 2022, for late submission of income tax returns and late payment of income tax during the years 2020 and 2021;
    • to refund to SMEs and tourism sector enterprises, in addition to the salary compensation in 2021, the salary compensation in 2022 paid to employees up to 30 June 2022 as follows:
      • MUR 500 monthly per employee deriving a basic wage not exceeding MUR 13,500; and
      • MUR 400 monthly per employee deriving a basic wage exceeding MUR 13,500 up to MUR 50,775;
  • It will be clarified that the foreign employer of the holder of a Premium Visa will not, in respect of that employee, be subject to the payment of:
    • corporate tax under the Income Tax Act; and
    • social contributions under the Social Contribution and Social Benefits Act;
  • Relevant legislation will be amended to clarify that a share buyback, i.e., acquisition by a company of its own shares, will be subject to registration duty and tax in the same manner as for a transfer of shares;
  • The Tax Arrears Settlement Scheme (TASS) will be re-introduced, providing for a full waiver of penalties and interest where tax arrears, outstanding under the Income Tax Act, the Value Added Tax Act, and the Gambling Regulatory Authority Act, are paid in full by 31 March 2023 and provided that the taxpayer registers under the Scheme by 31 December 2022;
  • The minimum amount of tax in dispute for review by the Alternative Tax Dispute Resolution (ATDR) Panel will be reduced from MUR 10 million to MUR 5 million;
  • The Income Tax Act will be amended to allow Mauritius to enter into international arrangements for:
    • alternative dispute resolution with a view to resolving cross-border tax disputes; and
    • implementing the internationally agreed standards to prevent base erosion and profit shifting;
  • The power of the Minister of Finance to make regulations will be extended to cover internationally agreed policies to address the tax challenges arising from the digitalisation of the economy; and
  • The Mauritius Revenue Authority Act will be amended to empower the MRA to recover foreign taxes in order to provide assistance to foreign countries in the recovery of taxes.

Click the following link for the Mauritius Budget 2022-2023 webpage for more information.