Here's what to expect from the Budget 2021-22 tax measures

• Dividends paid by a non-resident to another non-resident is not taxable in Mauritius

• Non-resident foreign limited partnerships are not required to submit return of dividend

• Companies engaged in the medical, biotechnology and pharmaceutical will be taxed at 3% instead of 15%

• 3% corporate tax applicable to private universities set up in Mauritius

• The list of priority areas of intervention on which companies can utilise 25% of their CSR Fund has been extended to include the restoration of building designated as national heritage under the National Heritage Fund Act 2003

• Companies contributing to the COVID-19 Vaccination Programme Fund allowed to claim the amount contributed as a tax deduction from their taxable income

• Large manufacturers entitled to 110% deduction on purchase of products manufactured locally by SMEs

• Double deduction available:

  • to manufacturing companies on expenditure incurred on market research and product development targeting the African market

  • on the acquisition of specialised software and systems

  • to private health institutions for expenses related to international accreditation

• Manufacturing companies can carry forward unrelieved investment tax credit for a period of 10 years

• Biotechnology and pharmaceutical companies allowed a full tax credit on the costs of acquisition of patents

• Research & Development (“R&D”) tax incentive scheme extended by 5 years up to June 2027

• Tax holiday on Family Offices and Fund and Asset Managers extended from 5 to 10 years

• The Arm’s Length Test provided under Income Tax Act, applies to both domestic companies and Global Business Companies

Companies registered with the Economic Development Board (“EDB”) as a holder of an Investment Certificate are eligible to:

• a 5% tax credit over 3 years on capital expenditure incurred on new plant and machinery (manufacturing company only)  until 30 June 2023

• an 8-year tax holiday in the case of new companies

The above new incentives are applicable to companies operating in the following sectors:

• Aquaculture

• Industrial Fishing

• Seafood processing

• High Tech manufacturing

• Pharmaceutical research and manufacturing

• Agro Processing

• Food Processing

• Healthcare, Biotechnology and Life Sciences

• Nursing and residential care

• Digital technology and innovation

• Marina

• Tertiary Education

• Seeds Production

• Other activities as approved by the EDB

• Foundations and trusts benefiting from a preferential tax regime has to comply with prescribed substance requirements

• Small enterprises that elect to pay a presumptive tax of 1% of their turnover will be exempted from CSR obligations

• As from 1 July 2021 and for period of 2 years, SMEs will be allowed to use their unutilised contribution of training levy with the Human Resource Development Council (“HRDC”) to finance external business advisory services up to a maximum amount of Rs 50,000

• Salary compensation paid to the employees of an SME, for the period January to June 2021, will be refunded as follows:

• The salary compensation is not applicable where an SME has benefitted from the Wage Assistance Scheme in that month

• The National Empowerment Foundation and the New Social Living Development Ltd will become exempt bodies for VAT purposes in respect of construction of social housing

• Preparation and supply of dumplings made up of meat, fish, squid, crab, chicken, vegetables or milk, whether cooked or uncooked, to final consumers

• Animals for the purpose of training, breeding and re-export

• VAT exemption on construction of purpose-built factories for manufacturing of pharmaceutical products and medical devices as well as for clinical and pre-clinical trials

• The remittance of 0.4% of net VAT collection credited by MRA on a quarterly basis into the Film Promotion Fund will be discontinued

• Companies operating in specific sectors and registered with the EDB as a holder of an Investment Certificate will benefit from VAT exemption on plant, machinery and equipment and construction of purpose-built building and plant and equipment (excluding vehicles) for research and development

• Companies providing healthcare, nursing and residential care services will benefit from VAT at 0% on the item listed above

• Monetary thresholds for submission of information reduced by half

• Bank or a non-bank deposit taking institution to report:

1. In case of an individual, a société or succession, a deposit in excess of Rs250,000 or deposits in excess of Rs2m in aggregate

2. In case of a corporate, a deposit in excess of Rs500,000 or deposits in excess of Rs4m in aggregate

• Money changer or an exchange dealer to report any foreign currency transaction equivalent to Rs100,000 or more

• Insurance company to report insurance premium in excess of Rs250,000 paid 

• MRA can request taxpayers to provide information electronically for income tax and VAT

• MRA may conduct virtual meetings with taxpayers through a teleconferencing device

• The time limit of 30 days shall run as from the date the MRA receives any additional information sought

• Types of records that a person in business should keep at its premises and make available for audit purposes to the MRA shall be stipulated in forthcoming regulations

• Introduction of penalties for companies failing to comply with MRA requests relating to exchange of information

• Mandatory attendance and production of documents before the ARC by any person including a retired Government officer.

• There is no requirement to make payment upon appeal to the ARC when an objection has been lapsed for failure to provide requested information

• MRA to issue assessments, without seeking authorisation of the Independent Tax Panel of the ARC, in cases of fraud or non-submission of tax return by a taxpayer

• The aggrieved taxpayer shall be entitled to the objection and appeal process

• The definition of 'money laundering' in the MRA Act will be aligned with the definition provided under the Financial Intelligence and Anti-Money Laundering Act

• Mandatory attendance and production of documents before the ARC by any person including a retired Government officer. Under Current Payment System (CPS): Amendment to be made to cater for persons subject to tax at the rate of 10%

• Under Advance Payment System (APS): Amendment to be made to cater for companies which are subject to corporate tax at a lower rate than 15%

• Under CPS: Income tax liability due in the income year 2020/2021 to be deferred up to October 2021

• Under APS: Income tax liability due in November 2020 up to May 2021, to be deferred until 30 June 2021

• Present fee of Rs300 will not be applicable for amendments made to the aircraft/ship cargo manifest due to causes beyond the control of the master or agent of the aircraft

• MRA Customs may issue clearance to any departing aircraft/ship electronically

• Economic operators may submit a consolidated Bill of Entry for goods of minimal value imported/exported by air during a month

• Electronic submission of bill of lading and other documents required for clearance of goods will be allowed

• An administrator, executor, receiver or liquidator appointed to manage or wind up the business of a person transacting business, has to inform the MRA Customs of his appointment within 15 days  

• Penalty and interest will be applicable in case of non-payment of duties and taxes by the due date under the Deferred Payment Scheme

• A penalty Rs500 per day of non compliance up to a maximum of Rs5,000 will be imposed on master, agent of an aircraft or ship failing to amend his cargo manifest to account for any discrepancy between the manifested cargo and landed cargo within 5 working days after the vessel has been berthed or the aircraft has landed
  

• Definitions for jewellery, precious metal and precious stone will be introduced in line with those in the Financial Intelligence and Anti-Money Laundering Act

• The MRA Customs has the power to enforce customs laws where there is suspected money laundering involving precious stones and metals or any goods of high value

• Goods may be imported for a maximum period of twelve months under the Temporary Admission Scheme and for a maximum period of three years for goods imported in connection with the implementation of a project

• A manufacturer engaging in different types of economic activities is now required to make a single application for all excise licences and the fee for each excise licence will remain payable

• Manufacturers of sugar sweetened products will be allowed to submit a consolidated Bill of Entry for goods warehoused and cleared during a month and taxes should be paid within 5 working days from the end of that month

• Penalty and interest payable on late payment of excise duty will be harmonised with those under the Customs Act

• MRA Customs will be empowered to recover erroneous payments made to exporters/recyclers in respect of waste PET bottles exported/recycled

• The validity period of excise licences granted to importers/manufacturers of single use plastic products, which was due to expire on 31 December 2020 is extended until 14 January 2021 with retrospective effect