It is with pleasure that we present to you our high level review of the 2018 / 2019 budget as presented by the Minister of Finance on the 14th of June 2018.
We are at your disposal should you have any questions concerning the 2018 / 2019 budget.
BUDGET BRIEF 2018/2019
Tax rate reduced from 15% to 10% on annual net income derived by an individual of up to Rs650,000
Lump sum received exemption threshold on severance allowance, pension or retiring allowance increased from Rs2m to Rs2.5m
Exemption on Insurance Industry Compensation Fund
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
As from 1 July 2018, the income exemption thresholds will be increased by MUR 5,000 for all categories
Income Exemption Threshold is now available to retired person deriving emoluments not exceeding Rs50,000
Income tax on winnings
Final withholding tax of 10% will apply on winning amount exceeding Rs 100,000 obtained from:
The Mauritius National Lottery – ‘Lotto’
Government Lotteries – ‘Loterie Verte’
Winnings in casinos and gaming houses
An individual deriving net income and exempt income exceeding Rs.15 million in an income year or owns assets costing more than Rs.50 million is required to submit a statement of assets and liabilities together with his income tax return for the income year starting 1 July 2017. However, an individual who has submitted his income tax return for the last five years will not be required to submit the statement.
Corporate tax rate of 3% to companies engaged in export of goods will be extended to companies involved in global trading activities
Corporate tax exemption granted to Freeport operators and Freeport developers on export of goods will be removed
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 more TDS on director fees
Global Business Sector
A new harmonized fiscal regime for domestic and Global Business Companies
The Deemed Foreign Tax Credit regime applicable to companies holding a Category 1 Global Business Licence will be abolished as from 31 December 2018 and replaced by a partial exemption regime whereby 80% of specified income will be exempted from income tax. The income exemption will be granted to ALL companies, except banks, on the following income:
Foreign source dividends and profits attributable to a foreign permanent establishment;
Interest and royalties; and
Income from provision of specified financial services.
A partial exemption regime whereby under certain conditions, 80% of specified income will be exempted from income tax
No new Category 2 Global Business license 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
All resident companies and partnerships incorporated/registered under laws of Mauritius having majority shareholding/parts held by non-resident and which conduct business mostly outside Mauritius will be required to seek a global business license or an authorization from the Financial Service Commission (FSC) through a management Company.
This last point is still quite unclear and we are waiting for the Finance Bill to be circulated to have more details but this is our understanding following the budget speech.
Foreign retirees will be exempted from custom duties on import of personal effect up to a value of Rs2m
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 nonrefundable contribution of USD1m for the main applicant and an additional USD100,000 for each dependent
Mauritian passport against a nonrefundable contribution of USD500,000 for the main applicant and an additional USD50,000 per passport for each dependent
With regards to Exchange of Information with other countries (CRS), a person who fails to furnish information for the purpse of exchange of information with other countries will be liable to penalties.
A property developer under the National Regeneration Scheme is eligible to claim a refund of VAT paid on buildings, capital goods, professional fees and fit-out works.