Transcript Document

Budget 2013
Our analysis
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“ We saw the threats and we
overcame them. We saw the
opportunities and we seized
them…..
”
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Table of contents
Page
number
Economic indicators
4
Government revenue and expenditure
7
Foreign Direct Investment
10
Infrastructure
13
Imports and exports
15
Education and Health
19
The Traditional pillars
22
Emerging sectors
27
Fiscal measures
30
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Economic
indicators
“In spite of this turmoil, Mauritius
not only achieved positive growth
but we improved our economic
fundamentals….”
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Key economic indicators
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Historical and projected inflation
rate
Inflation
–
Inflation has cooled down to 4.1%
–
It is projected to be 5% in 2015
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10
8
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Gross Domestic Product
–
6
The Mauritian economy will grow by 3.4% this
year
4
2
0
►
Despite the bleak global environment, GDP is
forecasted to grow by 4% in real terms in 2013
Unemployment rate
–
The unemployment rate stagnated around 8%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
GDP Growth Rate
Growth rate in percentage
–
6
5
4
3
2
1
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Year
5
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Key economic indicators
►
Equity market indices
–
Market indices
Equity market indices paint a somewhat more
optimistic picture
9,000
8,000
7,000
–
–
All of the three key indices have shown a steady
rise
6,000
This suggests improved investor confidence,
which might be the result of growing optimism
over the country’s growth
5,000
SEMTRI
4,000
SEMDEX
3,000
SEM-7
2,000
1,000
2006
►
2007
2008
2009
2010
Budget deficit
–
The budget deficit is estimated to be around
2.5% of GDP by the end of the calendar year
2012
–
It is expected to be 2.2% for 2013
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2011
Government
revenue and
expenditure
“Tax revenues collected by the MRA
alone have increased by 10%....”
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Government revenue
►
Revenue
–
–
–
–
Revenue - 2011
There has been a 9.2% increase in overall tax
revenue in 2012
3%
1%
10%
Total revenue will go up by 12.5% to Rs 83.3
billion, of which Rs 71.1 billion from taxes in
2013
Taxes
Social contributions
Grants
86%
Other revenue
The improvement is attributed to:
–
Efficiency in administration of taxes
–
Results of tax amnesty schemes
Revenue projections
100,000
Revenue projections show increase in taxes over
the next four years to Rs 82 billion in 2015
80,000
60,000
40,000
20,000
2011
Taxes
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2012
2013
Social contributions
2014
Grants
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2015
Other revenue
Government expenditure
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Expenditure - 2011
Expenditure
–
Compensation of employees
Improving control on public expenditures
–
3%
11%
6%
Setting up of a Public Sector Task Force
and Local Authority Governance Unit
Interest
8%
Subsidies
12%
36%
–
Compensation of employees represent 23% of
government expenditure in 2011
–
Total actual expenditure in 2011 amounts to Rs
87 billion including capital repayments
–
Grants
Expenditure will increase to Rs 91.8 billion of
which Rs 11.7 billion is for direct capital
expenditure
–
This is estimated to reach Rs104 billion in 2013
Use of goods and services
23%
Social benefits
1%
Other expenses
Expenditure by sector - 2011
General public services
21%
Public order and safety
24%
Economic affairs
13%
9%
Housing and community amenities
9%
15%
5%
Health
Recreation, culture and religion
1%
Education
3%
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Environmental protection
Social protection
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Foreign direct
investment
“Our policies on opening the
economy and our relentless work to
improve the investment climate ...”
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Foreign direct investment
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►
►
►
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Foreign direct investment (“FDI”) amounted to Rs70 billion for
the past 7 years, as a result of favourable investment climate
0%
2%
0%
FDI by sector - 2011
1%
2%
Intensification of investment promotion targeting China and the
rest of Asia
Upgrading of sovereign debt from Baa2 to Baa1 by Moody ‘s
confirms positive business climate
0%
Agriculture, forestry and fishing
Manufacturing
22%
0%
6%
49%
0%
Electricity, gas, steam and airconiditioning
supply
Construction
17%
Wholesale and retail trade
1%
FDI flows from Africa and Asia have already exceeded those
from Europe
Transportation and storage
Accommodation and food service activities
Measures to attract FDI:
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Revisit Business Facilitation Act;
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Assistance to implement large projects;
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Smoothening of procedures to obtain occupation and
residence permits to investors and professionals;
FDI by sector - 2012
Manufacturing
2% 3%
Construction
–
–
–
Permit holders allowed to acquire apartments;
31%
Signature of bilateral investment treaty with USA; and
Wholesale and retail trade
47%
Transportation and storage
Extend our Double Taxation Agreement networks with
African countries.
6%
11%
Accommodation and food service
activities
Information and communication
0%
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0%
Real estate activities
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Foreign direct investment
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Mauritius has already well positioned itself to encourage FDI through various business facility
measures and reduction in cost of doing business
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These measures would position Mauritius as the preferred African Hub for investment
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Infrastructure
“..this Budget will build upon the
strong foundations that the
Government has laid ….”
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Infrastructure
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Public Sector Investment Programme
–
Total expenditures - 2011
Rs28.6 billion, an increase of 39% over last year’s budget,
allocated for the construction and improvement of infrastructure
General public services
21%
principally in the following areas:
o
Public order and safety
24%
Economic affairs
13%
water and electricity resources,
9%
Environmental protection
Housing and community amenities
o
o
9%
waste water management,
15%
5%
Health
Recreation, culture and religion
1%
road improvement,
Education
3%
o
port and airport infrastructure
o
communication facilities among others.
-
Opportunity to implement the Government programme announced
in last April – major public infrastructure to be financed through
FDI inflows to the extent of 10%
-
Massive investment in roads and other infrastructure projects
would contain the unemployment rate
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Social protection
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Imports and
exports
“Growth is visible across the
country…”
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Imports and exports
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Statistics
Exports for the six months ended 30
June 2012
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Strong reliance on traditional markets
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Total exports for the six months ended 30 June 2012
America
10%
Africa
23%
amounted to Rs 32,220 million
-
Europe
60%
Total imports for the corresponding period amounted to
Rs 77,302 million
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Budgetary measures to boost exports
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Air access to emerging markets: China and Russia
-
Extension of Double Taxation Agreements (“DTAs”)
Asia
7%
Imports for the six months ended
30 June 2012
Africa
10%
Europe
24%
Asia
57%
-
Revamp of VAT refund scheme
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Abolishing of AGOA levy
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Introduction of Pre-Clinical Research Bill
-
Extension of Student Visas and part time work schemes
Central Statistics Office
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America
5%
Oceania
4%
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Imports and exports
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Import and export segmentation
25%
Exports by product
Pearls,
precious and
semi precious
stones
3%
20%
Others
17%
Sugar
12%
15%
Fish and fish
preparations
19%
Imports
Articles of
apparel &
clothing
accessories
44%
10%
Live
primates
1%
Exports
5%
0%
Textile
products
4%
Central Statistics Office
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Imports and exports
Forecast % change in volume of imports and exports
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Government approach
-
14%
Improve access to economic and
12%
business information
-
-
10%
Volume of imports of
goods and services
Market consolidation and diversification
8%
Volume of Imports of
goods
6%
Volume of exports of
goods and services
4%
Volume of exports of
goods
Technology upgrade
Productivity enhancement
Compliance with international standards
2%
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Targeted sectors
0%
2010 2011 2012 2013 2014 2015 2016 2017
-
Medical and pharmaceutical
-
High precision metal and plastic products
International Monetary Fund, World Economic Outlook Database, October 2012
-
Technical textiles
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Education and
health
“the performance of our economy
this year tells the story of a
population that is resourceful…”
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Education
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Increase in education budget by 12% to Rs 12.6 bn
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Country wide technology access in schools
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Access to free online IT training programme
Massachusetts Institute of Technology
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Introduction of government-backed loan schemes at
Repo rate + 3% for university fees for eligible
students
–
–
Bridging the gap between market requirements and
academic qualifications
Commitment to finding employment for school
leavers through the Youth Employment Programme
No of students enrolled in
tertiary education
No of students
45,969
44,334
2010
2011
Change in employment by industry 2012
1000
800
600
400
200
–
Industry placements further encouraged
0
-200
–
This may help to reduce the high unemployment
rate among youth
Wholesale and
retail trade
ICT
Agriculture,
foresting and
fishing
Manufacturing
-400
-600
-800
-1000
Change in employment
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Education
Professional,
scientific and
technical
Health
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Rs 8.7 billion allocated to health services
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Recruitment of 25 specialists, 75 general practitioners and nurses
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Continuous Professional Development introduced for medical
practitioners and dentists
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Pre-registration exams for medical graduates to ensure
competence
–
Introduction of new shift system
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Tax introduced on sugar content of soft drinks
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Increase in excise duties on alcohol and cigarettes
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The traditional
pillars
“Supporting growth and creating
employment…”
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Financial services sector
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Encouraging growth rate of 12.4% in the global business sector
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Continuation of measures aimed at diversification of the global business market
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Creation of the Limited Partnership Bill
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Creating a favourable regime for non-treaty funds
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Investment destination of
global business funds
Africa
Europe 13%
4%
Expansion of DTA and
America
2%
Others
4%
Investment Promotion Agreements
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Enhanced substance requirements for Tax Residence Certificate
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Tax Information Exchange Agreement to be signed with India
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Cap on bank charges in respect of banking sector
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Licence fees for management companies would be based on turnover
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Introduction of a deposit insurance legislation
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Asia
77%
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Tourism
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Double digit increases in tourist arrivals from Asia, Africa and Australia
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Arrivals from Europe expected to stabilise in 2013
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China and Russia targeted as new markets
% of Tourists arrivals
60%
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Entertainment facilities promoted in non-residential areas
50%
40%
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Mauritius promoted as a shopping destination
Medical tourism on the increase
30%
20%
2010
10%
2011
0%
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Facility to pay the Environment Protection Fee extended to two
years for hotels and guest houses in trouble waters
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Medical tourism on the increase
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50% reduction lease rental for hotels in reconstruction or renovation
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Manufacturing sector
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Manufacturing sector is the largest sector in the Mauritian economy contributing to more than 15%
of the country’s GDP
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Enablers in the budget include access to finance and reduced borrowing costs
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Higher tax deductions on acquisition of plant and equipment for manufacturing companies
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Expanding the USA and the African market share
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AGOA levy abolished to boost exports
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Increased marketing budget for products “Made in Mauritius “ at overseas level
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Bank guarantee for expatriates working in export- enterprise abolished
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Additional certainty for business as changes in import duty will be communicated at least 6 months
prior to the changes
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Debt of up to Rs 20,000 undertaken with the Development Bank of Mauritius which has remained
unpaid for at least 3 years will be fully waived
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Refund in respect of overseas marketing to Small and Medium Enterprises is increased to Rs
200,000
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Agriculture
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Land conversion to be monitored
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Subsidy on locally produced compost to discourage use of chemical fertilizers
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VAT refunds on extended list of equipment
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Freight rebate scheme extended for fruit planters and exporters
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Efforts made to extend market access for refined sugar till 2020 instead of 2015
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Growers of fruits and vegetables allowed to join the Field Operations Regrouping and Irrigation
Project scheme with a view to reduce their cost of production
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Cost of pre-market tests and certifications would be borne by the state for qualifying planters
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Emerging sectors
“Those countries that will succeed
will be those that have risen to the
challenges of a world in
transition…”
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Emerging sectors
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Seafood
–
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The seafood sector has witnessed negative growth in the
year 2011 after fast expansion in 2010
Additional small scale aquaculture projects being
launched to harness the economic benefits
Sectoral real growth rate
14.0%
12.0%
►
–
Continue lagoon replenishment program
–
Creation of off-shore wind farms in Rodrigues
10.0%
Information and Communications Technology
8.0%
6.0%
2010
4.0%
–
Better access and improved internet connection at
subsidised fee
2011
2.0%
0.0%
–
Internet and new technology in schools
–
Payment in various government departments can be
made electronically
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Extension of optic fibre connection to Rodrigues
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Increase in the number of 4G spots
-2.0%
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Emerging sectors
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Cloud computing
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Worldwide revenue from public IT cloud services exceeded $21.5 billion in 2010 and will reach
$72.9 billion in 2015, representing a compound annual growth rate (CAGR) of 27.6%
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China spent $286 million on cloud-computing infrastructure last year, and the amount will
increase to more than $1 billion in 2016 according to International Data Corporation (“IDC”)
–
Cloud computing is expected to create 2 million jobs in India by 2015 according to IDC
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Key aspects on introduction of cloud computing: Security and Privacy, Standards and risk
management, cross border taxation, regulatory compliance, technological infrastructure and
human resources training.
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Fiscal measures
“create fiscal space for the
ambitious..”
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Fiscal measures
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Personal tax
–
Annual tax deductions on contributions made to a medical or health insurance policy
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Amount of deductions depends on the category of the individual and number of dependents
–
CPS threshold increased to Rs 4 million
–
Increase in the monetary value of benefits- in- kind in respect of the use of company cars,
hotel and lodging costs
–
Interest received by an individual from debenture quoted on the stock exchange would be
exempt from tax
–
Income Exemption Threshold for disabled person aligned to that of retired persons
–
Exemption in respect of severance allowance will cover negotiated compensation under the
Employment Rights Act but will be limited to the Courts ruling; effective date is backdated to 1
February 2009
–
Tax Amnesty scheme applicable as from January 2013 to September 2013
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Fiscal measures
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Corporate tax
–
New category of assets qualifying for annual allowances and higher annual allowances rates
for manufacturing and eco-friendly equipment for 2 years
–
Increase in the value of asset to Rs 50,000 that qualifies for 100% annual allowance in the
year of acquisition
–
Temporary suspension of the Alternative Minimum Tax for hotel and manufacturing
companies
–
Income Tax exemption granted to global funds not requiring any benefit under the DTAs and
set up as a corporate body
–
Advance Payment Threshold increased to Rs 4 million
–
Service fee payable for issue of Tax Residence certificate under a DTA.
–
Deduction of Tax at source mechanism extended to laboratory technicians
–
Tax Amnesty scheme applicable as from January 2013 to September 2013
–
Rate of DTS on interest payment to non-residents increased to 15%.
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Fiscal measures
►
Corporate tax
–
Special levy on banks maintained for the years of assessment 2013 and 2014
–
Solidarity levy on telephony service providers extended to the year of assessment 2014
–
Companies can carry forward any unremitted CSR contributions of up to 20% to the next year
provided approval is obtained from the CSR committee
–
Basis of computing the income tax for companies engaged in the insurance sector will be
reviewed after consultations with the relevant stakeholders
–
More clarity on taxation of foreign exchange gains
–
Tax holiday for small enterprise has been removed
–
Freeport status would be granted to companies wishing to carry out specific manufacturing
activities for export to the African continent
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Fiscal measures
►
Value Added Tax
–
Increase in the statutory VAT registration threshold to Rs 4 million
–
VAT refund scheme for the agro-industrial and fisheries sector extended for an additional year
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List of capital expenditure qualifying for the refund is increased
–
VAT refund on fittings, furniture and equipment for shops and restaurants in city centres will
be made within 7 days
–
Simplification of VAT refund for tourists at airport
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Abolishment of VAT on cinema, concert and shows tickets
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Other fiscal measures
►
►
Customs duty and tariff
–
Reduction of duty on certain goods in line with SADC trade protocol
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Shops operating under the ‘Deferred Duty and Tax Scheme” will now be able to export goods
to customers outside Mauritius under customs control
Land transfer tax and registration duty
–
Registration duty exemption for first time buyers of residential property increased to Rs 1
million for the purchase of land and Rs 4 million for the acquisition of built up residential
property
–
Registration duty is applicable on the value of the immoveable property transferred and no
longer on the lower of the value of the immoveable property or the value of the shares of the
company being transferred
–
Dilution in the control of companies holding property would attract registration duty
–
The tax base for registration duty and land transfer tax of immoveable property on plan would
be the value of the immoveable property at the time of transfer
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Disclaimer
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Disclaimer
►
The information in this pack is intended to provide only a general outline of the
subject covered. It should not be regarded as comprehensive or sufficient for
making decisions, nor should it be used in place of professional advice
►
Accordingly, Ernst & Young accepts no responsibility for loss arising from any
action taken or not taken by anyone using this pack
►
Further, the information in this pack will have been supplemented by matters
arising from any oral presentation by us, and should be considered in the light
of this additional information
►
If you require any further information or explanations, or specific advice, please
contact us and we will be happy to discuss matters further
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