Country Correspondent – Mukhta Toofanee

The Finance Act 2020, giving effect to the budget measures as announced by the Minister of Finance Economic Planning and Development in his Budget Speech of 4 June 2020, was enacted on 7 August 2020. The Budget was presented in a special context given that Mauritius was not spared by the COVID-19 Pandemic. The Finance Act 2020 provides a number of fiscal measures with some of them being initiatives to create the necessary environment to promote economic growth. A description of the most important tax measures, both policy and administration, are summarized below:

Personal Income Tax Measures

• Expediting income tax refund to taxpayers

  It is often argued that revenue administrations are very slow in refunding taxpayers. This factor is closely monitored by the Mauritius Revenue Authority. In fact, the Income Tax legislation has been amended to put an obligation on the tax administration to effect all refunds within a period of 60 days from the due date for the submission of the return or the date of receipt of the claim or from the date of receipt of all documents and information requested to support the refund.

• Claim for bedridden as a dependent

  An individual taxpayer may claim a deduction in his annual tax return in respect of a bedridden next of kin under his care provided his total number of dependents does not exceed 4 and that the bedridden next of kin is eligible for the carer’s allowance payable under the National Pensions Act.

• Enhancement of E-services delivery

  The MRA will further develop its e-services platform to improve efficiency in its service delivery to taxpayers by:

(i) Allocating an e-tax account to every person required to submit a return or statement under our Revenue Laws; and

(ii) Setting up a system for the secure electronic service of notices and documents as well as payment of taxes.

Measures to improve business climate

• Double deduction for expenditure incurred on medical research and development

  A company engaged in medical research and development and incurring expenditure on medical research and development may deduct from his gross income twice the amount of that expenditure incurred in an income year provided the research & development is carried out in Mauritius.

• Double deduction for expenditure incurred on patents and franchises

  A company which incurs expenditure for the acquisition of patents and franchises and costs to comply with international quality standards and norms will be able to deduct from its gross income, twice the amount of the expenditure incurred in that income year. However, in so doing, the company shall not be entitled to annual allowance in respect of those patents and franchises.

• Additional investment allowance to companies affected by COVID-19

  A company having invested during the period 1 March 2020 to 30 June 2020 on the acquisition of new plant and machinery is allowed a further deduction of 100 per cent of the capital expenditure so incurred by way of investment allowance over and above the usual annual allowance on the plant and machinery.

• Investment tax credit to manufacturing companies

  A manufacturing company having incurred capital expenditure during the period 1 July 2020 to 30 June 2023 on new plant and machinery is allowed to claim in the year of acquisition and in each of the 2 subsequent income years, a tax credit of an amount equal to 15 per cent of the cost of the new plant and machinery.

• Extension of time for payment of corporate income tax for companies operating in the tourism industry

  Any company engaged in specific activity in the tourism industry and having an accounting period ending on any date during the period September 2019 to June 2020 is granted an extended delay to pay any due income tax as per return in 2 installments: half of the tax on or before 29 December 2020 and the remainder on or before 28 June 2021.

• Boosting investment in new sectors

  8-year tax holiday granted to:

  (i) A company starting its operations on or after 4 June 2020 and deriving its income from aquaculture in Mauritius;

(ii) A company approved by the Higher Education Commission as being a branch campus of an institution which ranks among the first 500 tertiary institutions worldwide and which started its operations in Mauritius on or after 4 June 2020; and

(iii) A company deriving its income from the manufacturing of nutraceutical products which has started its operations on or after 4 June 2020.

Value Added Tax Measures

• Implementation of an E-invoicing system

  There will be, introduced by the Mauritius Revenue Authority, an E-invoicing system to enhance compliance under VAT.

• VAT on digital services

  Mauritius is joining the bandwagon of countries that have already introduced VAT on digital services. Indeed, a foreign supplier, supplying any digital or electronic service over the internet or an electronic network which is reliant on the internet or is dependent on information technology for its supply, to a person in Mauritius will have to charge VAT on such service. This new provision will take effect on a date to be fixed by promulgation.