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Powers of the Mauritius Revenue Authority - are they too much?

By Dheerend Puholoo, Tax Leader

 


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With the recent increases in oil and other commodity prices, strengthening the economy, fighting inflation and building resilience should be among the main objectives of every government.

With the trade barriers and sanctions that have followed the Russia/Ukraine conflict, a food crisis is looming ahead. Unsurprisingly, the Budget 2022 - 2023 provides fiscal incentives to revive the agricultural economy in Mauritius. Examples are an 8-year tax holiday to planters engaged in sustainable agricultural practices and innovative agricultural practices, together with the provision of grants and subsidies. These measures will encourage people to work the increasing bare lands to reduce our dependence on food imports.

There is now clarity that the foreign employer of a holder of a Premium Visa will not create a taxable presence in Mauritius, and the employee will have no obligations under the Social Contribution and Social Benefits Act.

There are also measures to make tax collection more efficient. A good collaboration and understanding between the taxpayer and tax authority is key to this efficient tax collection!

It is acknowledged among the different stakeholders that there is a need to attract foreign talents in Mauritius and employees are still carrying the heavy burden of the recent increase in Solidarity Tax, which has negatively impacted the attractiveness of Mauritius. We can only hope that the Minister will soon attempt to restore the status of Mauritius as a fiscally attractive jurisdiction to increase the  influx of expatriates in the country.

The overhaul of the tax administration is continuing!

The threshold for lodging a case at the Alternative Tax Dispute Resolution (ATDR) panel has been reduced to Rs5m. The reason could be the increasing number of cases that are being resolved by the panel. Tax disputes could be a pain in Mauritius with cases dragging on for years. The ATDR panel is surely helping to reduce tax cases, and the question that arises is whether the MRA should not restructure its departments to provide for more of such avenues to expedite tax resolution.

In the same vein, the panel at the Assessment Review Committee (ARC) will also be revisited by reducing panel members from three (3) to two (2) to resolve tax matters through mediation. The delivery of oral decisions by the ARC will be an innovative way to expedite the settling of tax cases.

The MRA will be conferred with additional powers to lapse the objection of a taxpayer on non-submission of information, which he will subsequently prevented to submit to the ARC. Taxpayers seek to achieve expeditious tax resolution, and they should see the MRA as a collaborator in the process. Unfortunately, the MRA is increasingly seen as an aggressive tax collector.  Burdening taxpayers with requests for information by the MRA is now common, and only time will tell if this additional power will be used judiciously by the MRA.

The Budget has re-introduced the Tax Arrears Settlement Scheme (TASS) under which penalties and interests will be waived if the tax is paid before 31 March 2023. The reduced tax rates of 10% and 12.5% for individuals with income below Rs900,000 is another attempt to mitigate the effects of inflation.

The Budget has come with a series of warranted tax incentives in targeted sectors. There are also measures to make tax collection more efficient. A good collaboration and understanding between the taxpayer and tax authority is key to this efficient tax collection!


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Discover all the Tax measures announced in the
National Budget 2022 - 2023.
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Pre National Budget 2022 - 2023 video

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Contact us

Anthony Leung Shing, ACA, CTA

Anthony Leung Shing, ACA, CTA

Country Senior Partner, PwC Mauritius

Tel: +230 404 5071

Dheerend Puholoo, ACCA

Dheerend Puholoo, ACCA

Tax Leader, PwC Mauritius

Tel: +230 404 5079

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