Income Tax Holidays
The budget proposes income tax holiday for the below platforms:
- Innovation Box Regime
- Newly set-up companies that are engaged in innovation-driven activities will be granted an eight year tax holiday on income derived from their intellectual property assets developed in Mauritius
- However, as from 10 June 2019, existing companies will now benefit from the eight year tax holiday on income derived from their intellectual property assets developed in Mauritius.
- E-commerce platform
- Companies setting up an e-commerce platform will now benefit from a five year tax holiday provided that they are incorporated before 30 June 2025.
- Peer-to-Peer Lending
- Peer-to-Peer Lending operators will now be granted a five year tax holiday provided that the company starts its operation before 31 December 2020.
- Bunkering activities
- A four year tax holiday will be granted on income derived from bunkering of low Sulphur Heavy Fuel Oil.
- Marina activities
- An eight year income tax holiday will be granted to a newly set-up company developing a marina.
Non-residence criteria for companies
The non-residence criteria for a company incorporated in Mauritius shall henceforth be determined on the basis of its central management and control being outside of Mauritius.
Controlled Foreign Company (CFC)
The Income Tax Act will be amended to set out rules for Controlled Foreign Company (CFC).
100% accelerated annual allowance shall be granted in respect of capital expenditure incurred on plant or machinery not exceeding MUR60,000 (Currently MUR30,000).
Carry forward of Unrelieved Tax Losses
Where companies are facing financial difficulty and where there is a change in ownership, unrelieved tax losses may be carried forward provided that the Minister is satisfied that it is in the public interest to do so and provided that conditions relating to safeguard of employment are met. This will be applicable retrospectively as from 1 July 2018.
Companies engaged in Freeport Zone
- The budget now proposes that freeport operators or private freeport developers engaged in the manufacture of goods will be taxed at 3% instead of 15% on sale of goods on the local market
- The reduced tax rate of 3% on sale of goods on the local market will be applicable provided that existing manufacturing companies issued with a freeport certificate meet the below substance criteria:
- Employ a minimum of 5 employees; and
- Incur an annual expenditure exceeding MUR3.5 Million.
- Freeport operators will now be subject to CSR on sale of goods on the local market.
- The Minister of Finance has announced a series of measures to boost innovation, bunkering and marina activities subject to pre-substantial activities
- The new CFC rules demonstrate the commitment of Mauritius to ensure the tax regime is consistent with EU’s tax good governance criteria
- Exports of goods will continue to be taxed at 3%
- It is to be noted that companies with freeport licences issued on or before 14 June 2018 will continue to benefit from the current tax exemption until 30 June 2021.
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.