Mauritius Budget 2024: All You Need To Know

The Mauritian Minister of Finance, Dr. Renganaden Padayachy, termed this year’s budget “TOMORROW IS OURS”.

This budget lays out an inclusive approach to economic growth, enhancing both individual and corporate welfare while prioritising sustainable development. Key highlights include a significant increase in the minimum wage to MUR 20 000, and the introduction of a Corporate Climate Responsibility levy. New tax incentives aim to stimulate investments in innovative sectors and support businesses across various industries, with notable incentives for the financial sector such as the extended tax holiday for captive insurance companies and investment tax credits for AI and patents. Additionally, partial exemptions for companies in specific sectors, like those holding Robotic and AI Enabled Advisory Services licenses, underscore the government’s commitment to fostering technological advancement. There were also comprehensive financial assistance schemes for employers and amendments to Value Added Tax (“VAT”) regulations.

We set out below some of the key takeaways from the 2024/25 Budget speech.

Personal Tax

Further increase of the minimum wage for individuals

• The government will again increase the minimum wage this year, from MUR 15 000 to MUR 20 000. This means that no individual in full-time employment will have a revenue of less than MUR 20 000 as from the 1st of July 2024.
• It is an increase of over 65% from MUR 12 075 in 2022. The government will top-up a maximum of MUR 500 monthly for all those who have a revenue (including the Contribution Sociale Généralisée (“CSG”) Income Allowance) of less than MUR 20 000.

Exemptions and allowances

• The exemption threshold on lump sum received as pension, retiring allowance or severance allowance will be raised from MUR 2,5 million to MUR 3 million.
• An allowance paid by the government to an individual under a financial assistance scheme will be exempt from income taxes.
• All parents having children in full-time education in fee-paying private schools will be eligible to an income tax deduction of up to MUR 60 000 per child per annum.
• Increase of the income tax deduction from MUR 50 000 to MUR 100 000 for individuals donating to NGOs and charitable institutions.

Corporate Tax

Introduction of the Corporate Climate Responsibility Levy

• A Corporate Climate Responsibility (“CCR”) levy, equivalent to 2% of the company’s profits, will be imposed on companies with a turnover of more than MUR 50 million.
• These funds will be used to support national initiatives to protect, manage, invest and restore the country’s natural ecosystem and combat the effects of climate change.

Medical, Biotechnology or Pharmaceutical Sector

• Income derived from intellectual property assets by a manufacturing company engaged in medical, biotechnology or in the pharmaceutical sector will be taxed at the rate of 15% instead of 3% to comply with international norms.

Exemptions and Reliefs for companies – Exempt Income

• Interest income derived from a bond issued by a public sector company to finance infrastructure projects will be exempt from income taxes provided the exemption is approved by the Minister of Finance, Economic Planning and Development.
• As from 01 January 2024, the compensation payable by government or a public sector body for losses directly or indirectly suffered as a result of a natural disaster will also be exempt from income taxes.
• The exemption granted in respect of income derived from the sale of securities will be extended to cover sale of virtual assets and virtual tokens.

Tax holiday for Captive Insurance companies

• The 8-year income tax holiday granted to a captive insurer under the Income Tax Act 1995 (“ITA”) will apply as from the date the company has started its activities.

Partial Exemption

• A company holding a Robotic and Artificial Intelligence Enabled Advisory Services licence issued by the Financial Services Commission will be allowed to claim the 80% partial exemption on such income and provided it conforms with the substance requirements.
• The partial exemption granted to a licensed closed-end fund will be extended to cover income from sale of money market instruments or debt instruments.
• It will be clarified that the 80% partial exemption granted to a licensed CIS Administrator will not apply to income derived from the provision of administrative services by a management company to a CIS license holder.

Investment Tax Credit

• The investment tax credit of 15% over three years will now be applicable on Artificial Intelligence and patents.

Other Incentives

• Companies investing in corporate nurseries shall benefit from a tax credit of 25% on the cost.
• Private investment in the development of the creative industry, including concert venues and theatres will be eligible for a Premium Investor Certificate with incentives on taxation, amongst others.

Financial Assistance to Employers

• It is being proposed that a monthly financial assistance will be provided for payment of salary compensation 2024 of:

 Employees earning national minimum wage:

1. MUR 3 500 per employee of an Export Oriented Enterprise (“EOE”).
2. MUR 3 500 or MUR 1 750 per employee of a manufacturing enterprise with an annual turnover not exceeding MUR 100 million, depending on profitability.
3. MUR 2 500 or MUR 1 250 per employee of a Small and Medium Enterprise (“SME”) or a manufacturing enterprise with an annual turnover between MUR 100 million and MUR 500 million, depending on profitability.
4. MUR 1 250 or MUR 625 per employee of other enterprises facing difficulties, depending on profitability.
5. MUR 2 500 per employee of a registered charitable institution or religious body.

Employees earning basic salary above the national minimum wage but not exceeding MUR 50 000 monthly:

1. Maximum of MUR 2 000 per employee of an EOE.
2. Maximum of MUR 2 000 or MUR 1 000 per employee of an SME or a manufacturing enterprise with an annual turnover not exceeding MUR 500 million, depending on profitability.
3. Maximum of MUR 1 000 or MUR 500 per employee of other enterprises facing difficulties, depending on profitability.
4. Maximum of MUR 2 000 per employee of a registered charitable institution or religious body.

 Duration of Assistance:

1. From January 2024 to December 2024 for EOEs, SMEs, manufacturing enterprises, registered charitable institutions, and religious bodies.
2. For other enterprises, as approved by the Minister of Finance, Economic Planning and Development, up to December 2024.

Amendments and exemptions under the VAT Act

The following items will be added to the list of zero-rating for VAT:

1. services provided by a Management Company to trusts whose settlor and beneficiaries are non-residents or foundations whose founder and beneficiaries are non-residents;
2. vegetable seeds, fruit and flower seeds, bulbs and plants used for sowing or planting;
3. seedling trays;
4. plant pots;
5. agricultural sprayers;
6. roasted coffee; and
7. baby lotions;

 The following items will be exempt from VAT:

1. Entrance fee to digital art galleries;
2. Construction of a purpose-built building for the provision of primary, secondary and tertiary education will be extended to pre-primary and Technical and Vocational Education and Training with retrospective effect;
3. Motor vehicles, linked to construction, to approved contractors engaged in the construction of social housing units under a contract with New Social Living Development Ltd with retrospective effect.

Also, a provision will be made to allow diplomatic missions and agents to benefit from VAT exemption or refund on services.

Tax Administration

Income Tax

• Information sharing with the MRA will be permitted regarding financial assistance schemes with the Ministry of Finance, Economic Planning and Development, and anonymised data on emoluments and income with Maurice Stratégie for research on inequality and poverty in Mauritius.
• Taxpayers will not be allowed to submit an amended return if an objection has been made to the MRA against an assessment or if a representation has been lodged with the Assessment Review Committee (ARC).
• Banks will be required to include information about deposits made into credit card or prepaid card accounts by bank account holders in the financial transaction statements submitted to the MRA.

VAT

• It will be clarified that a person who has voluntarily registered for VAT purposes can claim, against his output tax, the input tax charged to him or paid by him on goods and services acquired as from the date of his voluntary registration.
• Where a supplier issues a VAT invoice stating the value of supply in foreign currency, he will be required to specify the conversion rate into rupees.
• The MRA’s time limit to request information or records for return examination will be four years following the taxable period in which the return is submitted. Assessments can now cover a maximum of four years before return submission to allow for late submissions.
• Non-VAT registered persons seeking VAT refunds on imported equipment under the VAT Refund Scheme must submit a statement from a freight forwarding agent or customs house broker certifying the VAT paid.

Extension of the Tax Arrears Settlement Scheme (TASS)

• The Tax Arrears Payment Scheme will undergo renewal for another year, offering a complete waiver of penalties and interest. This benefit applies to tax arrears outstanding under the Income Tax Act, the Value Added Tax Act, and the Gambling Regulatory Authority Act.
• Full payment by March 31, 2025, alongside registration under the Scheme by December 31, 2024, is required to qualify for this waiver.

Occupation Permits

• With an emphasis on attracting foreign talent, the government will reduce the threshold for Occupation Permits (OP) for professionals from MUR 30 000 to MUR 22 500.
• Professionals with at least 10 years of experience in wealth management, family office, virtual assets and virtual tokens will be granted a temporary Occupation Permit for three months, enabling them to work while awaiting approval.
• To streamline the recruitment of foreign workers, amendments to the Agricultural Workers (Job Contractors’) Regulations will enhance flexibility in the agricultural sector, while quotas on foreign labour will be eliminated in the manufacturing, jewellery, freeport, and ICT/BPO sectors.

 If you have any questions or require any clarifications, please feel free to contact us.