Special Levy on banks
  • Income derived by banks from GBC will be exempted from the special levy imposed on bank revenue under the Value Added Tax Act
  • Special levy imposed on banks having operating income exceeding MUR1.2 Billion in a year will be increased from 4% to 4.5%
  • However, a cap will be applicable on the above increase to ensure that the resulting increase in levy payable does not pose an excessive burden to the banks
  • Clarity has been provided that the special levy is not a tax deductible expense and that no foreign tax credit will be allowed to offset the special levy.
5% reduced tax rate for banks
  • The chargeable income of a bank in excess of its chargeable income in its base year (year of assessment 2017-2018) could be eligible to be taxed at a lower rate of 5%
  • In order to be avail of this reduced tax rate, the bank must grant at least 5% of its new banking facilities to the following business categories:
    • Small and Medium Enterprises in Mauritius
    • enterprises engaged in agriculture, manufacturing or production of renewable energy in Mauritius; or
    • operators in African or Asian countries.

KPMG Views

  • This budget provides for some fine-tuning of the changes in taxation of banks brought in the prior year budget
  • Although there would be a cap on the levy, no information has yet been provided on the quantum. It therefore remains to be seen how the cap would alleviate the burden of an increase in the levy rate for banks with an operating income exceeding MUR1.2 Billion
  • Banks are being incentivised to fund SMEs, priority sectors and strategic outbound investments
  • Introducing a cap on the special levy and the exemption with respect to GBCs are welcomed measures as special levy has a negative impact on the cost-to-income ratio for banks.


The above information has been extracted from the budget speech delivered by The Honourable Pravind Kumar Jugnauth, Prime Minister, Minister of Home Affairs, External Communications and National Development Unit and Minister of Finance and Economic Development, to the National Assembly, on 10 June 2019.

The Budget proposals may be amended significantly before enactment. The content of this summary is intended to provide a general guide to the subject matter and should not be regarded as a basis for ascertaining liability to tax or determining investment strategy in specific circumstances. In such cases specialist advice should be taken.