BUDGET 2015-2016 HIGHLIGHTS

BUDGET 2015 – 2016 HIGHLIGHTS

Encouraging entrepreneurship and growth towards a sounder future?

The Budget speech presented by the new Minister of Finance, Vishnu Lutchmeenaraidoo, has come as a surprise to many as it is a “no tax” budget with no significant increases in taxes and a focus on the growth of Small and Medium Enterprises, improvement in business facilitation and the development of some new employment-rich mega projects. The facilities being offered to SMEs and the creation of the new mega projects should create employment opportunities.

The Government’s efforts to try and tackle existing problems such as the flooding and water supply problem, poverty and traffic congestion in Mauritius whilst enabling existing industries such as the financial services sector to continue developing without any changes to taxation, are noteworthy. The tougher measures being imposed on gaming houses and bookmakers may not be to the taste of those avid gamblers but it all goes towards creating a sound awareness of responsible gambling and the necessity to control gambling practices in Mauritius.

We await the proclamation of the new Finance Act 2015 to view all the finer details but here are some of the interesting features of the Budget Speech 2015-2016:

Mega-projects

The unlocking of ‘ Smart City’ projects and ‘Technopoles’, including:

·         The Omnicane airport city in the south-east.

·         St Félix Village projects in the south.

·         The Médine Integrated Park in the west.

·         Roches Noires in the north-east.

·         The Azuri Phase 2 project in the north.

·         The Terra project in the north.

·         The Highlands City in the centre.

·         The Richeterre Project in the vicinity of Port Louis.

·         And 5 ‘Technopoles’ at Highlands, Rose Belle, Flacq, Rivière du Rempart and Bambous.

Small and medium enterprises

Any small company registered with the new SMEDA after 1 June 2015 will benefit from the following fiscal incentives:

·         No corporate income tax for the first 8 years;

·         No Tax Deduction at Source (TDS) for the first 8 years;

·         No requirement for submission of financial statements and annual returns to the Registrar of Companies for the first 8 years.

Also,

·         Launch of the Small and Medium Enterprises Bank (SME Bank) to provide seed capital to entrepreneurs without any need for personal guarantee;

·         Set up of a One-Stop-Shop which will provide under one roof, all the support, financing and information, as well as the delivery of all the permits and licenses that SMEs require to start and grow their businesses;

·         The annual fee payable to the Registrar of Companies by a small private company with turnover not exceeding Rs 10 million is being reduced from Rs 2,500 to Rs 500;

·         Increase of the VAT registration threshold from Rs 4 million to Rs 6 million;

·         Increase in the turnover threshold for submission of quarterly return under the Advance Payment System from Rs 4 million to Rs 10 million;

·         Simplified tax system and simplified financial systems and VAT system for small enterprises.

Human resource development and encouraging professionals to return to Mauritius

·         New courses will be offered at the Réduit, Montagne Blanche and Pamplemousses campuses.

·         Tailor made crash courses will be offered at the University of Mauritius in fields with high job prospects. Government will cover the cost of fees amounting to around Rs 80,000 per student per year.

·         MITD to put greater emphasis on training plumbers, electricians, welders, masons, carpenters, and other technicians for which there will be increasing demand as the ‘vaste chantier de développement’ unfolds.

·         Incentives to encourage professionals who have worked at least 10 years abroad to return to Mauritius, including:

·         exemption from income tax for a full period of ten years on all their income including worldwide income;

·         exemption from payment of customs duties of up to a maximum of Rs 2 million on a car that can be purchased in Mauritius or abroad;

·         Entitlement to bring back their personal belongings without payment of customs duties and VAT.

Water supply and drains

·         Resources of Rs 1.3 billion for priority drain works across the island;

·         At least 6 cubic metres of water per month free of charge;

·         Change of all defective water pipes in the network to reduce the huge losses in transmission - item in the Public Sector Investment Programme with a project value of Rs 20 billion to be implemented during the next 8 years;

·         Current Budget provision of Rs 3.5 billion for the water sector.

Land transport and traffic congestion

·         Investment in 2 fly-overs and 1 bridge:

·         fly-over at Decaen street to reduce traffic congestion in and out of Port-Louis;

·         design of the fly-over over the Phoenix and Jumbo roundabouts will be accelerated;

·         a new bridge to link Coromandel with the motor way.

·         Study to examine the feasibility of operating a ferry boat between Pointe aux Sables, Port-Louis, and Baie du Tombeau.

·         Acquisition of 100 semi low floor buses by the National Transport Corporation.

Poverty and CSR

·         New concept of “parrainage”: allowing institutions that are contributing to CSR to take under their wings those unsustainable pockets of poverty;

·         Companies, hereon, will be free to allocate the 2 per cent of CSR according to their own set of priorities;

·         Construction of 1,000 low cost housing units for families whose monthly income is below Rs 10,000;

·         Size of these housing units will be increased from 39 square meters to 50 square meters;

·         Increase of grants for families earning less than Rs. 10,000.

Other notable measures:

·         Change in the fiscal year from 31 December to 30 June;

·         Review of the IRS and RES scheme to identify shortcomings and weaknesses;

·         Raising of all the Income Exemption Thresholds for income year 1st July 2015 to 30th June 2016 by Rs 10,000;

·         Raising of additional deduction in respect of children who are pursuing tertiary studies, whether in Mauritius or abroad, to Rs 135,000 per child, and raising of allowable number of years from 3 years of study to 6 years;

·         Increase in annual license fees for gaming houses, bookmakers and totalisator operator, and increase in betting taxes;

·         As from 1st July 2015, a first-time home-owner will be able to deduct from his taxable income the full amount of interest paid on such loans over the years;

·         Deduction of total investment amount for a household investing in his own solar energy unit;

·         Abolition of 10 cents levy per message on SMS and MMS, with effect from 1 July 2015;

·         Exemption from payment of registration duty by first-time buyer of residential bare land if the value of the land to be acquired does not exceed Rs 1.5 million;

·         The amount payable by a person dissatisfied with a tax assessment made by the MRA or by the Registrar-General’s Department prior to lodging an objection will be reduced from 30% of the amount assessed to 10%;

·         The derogation from the confidentiality provision in the Income Tax Act will be amended to cover exchange of information in respect of all the taxes falling under the purview of the Convention to enable the implementation of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters developed jointly by the OECD and the Council of Europe. 





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