Budget 2016/2017 Highlights – Fiscal Measures
Budget 2016/17- A New Era of Development makes provision for a low and simple fiscal regime aimed at rebooting the economy in the midst of major challenges facing Mauritius hence laying the foundation to steering the economy to the next level of development.
Emphasis has been placed on the competitive advantage of Mauritius with the reintroduction of the concept of tax holidays and improved investment tax credits for companies in view of boosting investments and create employment.
Duties have been abolished on some 368 tariff lines, bringing the percentage of duty-free tariff lines from 89 to 95 percent on a number of products such that only few products are now subject to custom duties, thus positioning Mauritius to be a duty free island in the near future. Moreover, measures have also been announced to tighten up tax administration with a review of the Mauritius Revenue Authority (MRA) Act together with an increase in taxes on alcohol, sugar and tobacco.
With regards Income Tax, the Income exemption threshold has been increased by Rs 10,000 for all categories as well as an increase in income eligibility criteria for secured housing loans up to Rs 4 million. The time limit for submission of amended income tax returns has been revised to two years. In the same line, definition of “fraud” has been reviewed to include cases of non-submission of tax returns while VAT liability now triggered even without issue of invoice or receipt of payment.
Among the Corporate Tax measures:
- VAT removal on breakfast cereals as from 1st September 2016;
- Reduction in the price of cooking gas from Rs 330 to Rs 270 for a 12-kilo cylinder;
- Eight-year tax holiday extended to new enterprises set up by individual and cooperative and four-year tax holiday for existing enterprises registered with SMEDA;
- Exemption from the payment of corporate tax for cooperative societies on all non-sugar agricultural activities;
- introduction of a 15 percent levy on specific pesticides, herbicides and fruit ripeners, to curb the excessive use of these products;
- Tax holiday of five years applicable to certain entities licensed by the Financial Services Commission;
- Eight-year tax holiday to industrial fishing companies;
- Removal of VAT on 3D printers and providing customs duty exemptions on materials used in the manufacture of medical devices;
- Review of the taxation on motor cars with the rates of excise duty on motor cars between 1,001 to 1,600 lowered from 55 per cent to 50 percent while duty on hybrid motor cars has been brought to 30 percentage points for all cylinder capacity;
- Revamping of VAT refund scheme regarding the construction of new dwelling or acquisition of a newly built apartment up to a cap of Rs 500,000;
- Decrease from 55 to 25 percent on a hybrid car below 1,600 cc and zero duty on electric cars of up to 180 KW while the adjustment factor used at customs in the determination of the import value of a second hand car is being lowered to 5 percent;
- Increase in the refund on qualifying production expenditure under the Film Rebate Scheme up to a maximum of 40 percent and clarifying that production of films for export will be zero-rated for VAT purposes;
- No VAT on Photovoltaic Inverters and batteries;
- No registration duty on secured housing loan not exceeding Rs 2 million;
- First-time home-owner is allowed to deduct from his taxable income, the interests paid on a secured housing loan contracted on or after 1st July 2006.
Other measures pertain to the setting up of an Alternative Dispute Resolution mechanism at the MRA to expedite tax appeal cases exceeding Rs 10 million while at the same provision has been made to enable the MRA to request high net worth individuals to submit a statement of their assets and liabilities