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Budget 2017-2018

Synopsis

9 June 2017

Budget 2017-2018

Rising to the challenges in an

increasingly volatile international

environment

Contents

► Background

► The five challenges

► Disclaimer

Background

► Budget 2017-2018 is about "rising to the challenges of our ambitions"

► The Budget focuses on five main challenges:

► Fostering higher growth for more and better jobs;

► Investing massively in the infrastructure of the future;

► Further improving the quality of life of people;

► Ushering in a new social paradigm; and

► Consolidating macro-economic fundamentals

► The Budget is cast within the context of the Three-Year Strategic Plan

2017-2018 to 2019-2020

► Exceptional financial support from the Government of India through a line

of credit of USD 500million, other financial support of USD 130 million and

a grant of Rs 12.7 billion

The better the question. The better the answer.�The better the world works.

Fostering higher growth for more and better jobs

First challenge


► Setting up of an Economic Development Board to ensure greater

coherence and effectiveness in the implementation of the strategies

to foster higher growth

► The Government wants to build our footprint in the African continent

► Enhancing of bilateral cooperation with African countries in various

sectors

► Inauguration of the Special Economic Zone in Senegal is due soon: this will

give Mauritian companies access to warehouses and office spaces on 13

hectares

► Mauritian companies will be able to undertake development projects in Ivory

Coast

► Negotiations on Free Trade Agreements with China and the

European Free Trade Association will be pursued

► The Comprehensive Economic and Partnership Agreement with

India will be finalized


► Building innovative Mauritius

► Accelerated depreciation of 50% per annum will be available on

capital expenditure on research and development

► Double deduction will be available on qualifying expenditure on

research and development up to year of assessment 2022-2023


► Doing more to facilitate business

► Cost of connection to the electricity network will be reduced for

qualifying projects

► The Board of Investment will perform a business process

reengineering with a view to eliminate inefficiencies

► High tech machinery and equipment imported by an investor will be

considered as part of the minimum expenditure required to obtain

an Occupation Permit


► Stimulating growth and employment in key productive

sectors

► Certain companies will be taxable on their profits from exportation of

goods at a reduced rate of 3%

► Companies engaged in the manufacture of pharmaceutical

products, medical devices and high tech products will benefit from a

tax holiday of 8 years

► Introduction of the Innovation Box Regime for Intellectual Property

assets developed in Mauritius: companies will benefit from an 8

year tax holiday where their income is derived from the totality of

Intellectual Property assets

► The 8-year work permit policy for expatriate workers is being

extended to all manufacturing activities


► Stimulating growth and employment in key productive

sectors

► Issuance and renewal of work permits will be speed up: the

proposed time frame is 15 instead of 40 working days

► Exemption from payment of Land Transfer Tax and Registration

Duty on transfer of immovable property for the setting up of a

company engaged in high-tech manufacture

► VAT refund scheme extended to the following:

► Replacement of old lorries used for sugarcane harvest

► Specified tools and equipment used in tea cultivation

► Additional equipment for planters, breeders, bee keepers, fishermen

and bakers

► Exemption from payment of customs duty on all animal feed, with

the exception of poultry and pets


► Non-citizens acquiring residential property costing less than

USD 500,000 will be entitled to a Multiple-Entry Visa for a

maximum of 180 days per year subject to 5 consecutive

years. This is renewable every 5 years, depending on the

status of ownership


► Financial services

► Challenges from the OECD and the European Union

► Opportunities also exist from the new global economic environment

► A blueprint will be elaborated in collaboration with various

stakeholders in the sector: the forthcoming international

requirements regarding taxation will be taken on board, without

undermining the competitiveness of Mauritius

► Reform of tax regime for Global Business Companies to comply

with new international standards


► Financial services

► An international capital market will be set up with the objective to

attract Governments and corporates from Africa and other regions

will be able to issue multi-currency bonds in Mauritius

► The minimum capital requirement for banks will be increased from

Rs 200million to Rs400million. Existing banks will have a time frame

of 2 years to increase their capital to the new minimum capital

requirement


► Supporting Micro, Small and Medium Enterprises and

Cooperatives

► Movable assets may be given as loan collaterals: the Code Civil

Mauricien and the Code de Commerce will be amended in this

respect to implement this measure

► An SME platform will be set up to provide more visibility to SME

products.

► Export financing facility will be introduced to assist manufacturing

enterprises in SME

► Government will continue to guarantee loans made to SME by

commercial banks

► The Development Bank of Mauritius will provide finance to SME

with interest at 6% per annum. The rate is halved for loans given to

micro enterprises


Investing massively in the infrastructure of the future

Second challenge

Investing massively in the infrastructure of the future

► Around Rs 4.9billion will be invested over the next 3 years in

various infrastructure projects

► Businesses will be able to claim deduction for investment in

solar energy units against their taxable income

► Interest income on debentures issued to finance renewable

energy projects will be exempted from tax for both

individuals and corporates, provided that the tax free status

has been granted by the MRA


Improving the quality of life of people

Third challenge


► Water sector

► Water will be available round-the-clock for households as from 2020

► The Central Water Authority will invest heavily in infrastructure for

improving water distribution and replacement of pipes

► The water tank scheme is being extended by one additional year;

the eligibility criteria for the beneficiary’s income is being increased

from Rs 15,000 to Rs 25,000

► Consultancy services are being undertaken for a feasibility study for

the construction of Riviere des Anguilles dam

► Investment in the construction, upgrading and cleaning of drains will

be made over the next 3 years in several areas where flooding is a

risk


► Waste management

► Waste water networks in several regions will undergo rehabilitation

► 10,000 compost bins will be distributed to the population so as to

encourage production of compost from organic waste

► “Moris nou zoli péi’’ campaign

► The infrastructure of several public beaches will be upgraded

► Trade Union Confederations

► Customs duty exemption on purchase of 15-seater motor vehicle


► Sports and leisure

► Rs 25million will be earmarked for the implementation of a National

Sports Policy

► 15 major sporting infrastructures will be upgraded

► A monthly allowance will be granted to retired athletes who have

performed at African and international games


► Health care

► 624 personnel will be recruited: these include specialists in various

fields, student nurses and general staff

► Investment in hospital infrastructure and improving health care

facilities:

► Linear accelerators for treatment of cancer patients

► New mediclinics and community health centers

► Construction of modern warehouse facility for pharmaceutical drugs

and medical consumables

► New SAMU ambulances

► Increase of 20% in budget for acquisition of medicine, drugs and

vaccines


► Facilitating the day to day life of citizens

► Introduction of a People Facilitation Bill

► Citizens will be able to use the Citizen Portal to provide their views

in helping prepare the legislation in a democratic way

► Improving basic infrastructure over the island

► An exceptional capital grant of Rs 500million is being provided to

local authorities to address minor infrastructural work that have

been long outstanding


► Law and order

► Police patrols will be reinforced over the island, especially in crime

prone areas

► Judiciary

► A modern computerized system will be developed to help monitor

payment of fines and other court fees: online payment for these will

be possible. The system will also help keep track of the progress of

cases.


► Consumer well-being

► The retail price of flour will be reduced to Rs 4.85 per pound with

effect from 9 June 2017

► As a consequence, the price of “pain maison“ will decrease by 10

cents per unit

► Legislation will be amended so as to protect victims of sale by levy

► Value Added Tax on sanitary pads is being removed


► Investing in education

► Funds have been earmarked for the construction, extension and

improvement of infrastructure in public primary and secondary

schools

► Recruitment of additional teaching staff members

► Yearly allowance for laureates pursuing post graduate studies in

Mauritius will be increased by 10%

► Yearly living allowance for additional laureates studying abroad will

also be increased by 20%


Ushering in a new social paradigm

Fourth challenge


► Negative income tax system

► Employees in full-time employment with monthly emoluments of

less than Rs 10,000 will benefit from financial support

► The effective date for implementation of this measure is 1 January

2018

► The fund will be disbursed on semi-annual basis: the Mauritius

Revenue Authority will make the first payment by 30 August 2018

► No financial support will be provided where:

► The mandatory contributions to the National Pensions Fund and the

National Savings Fund have not been made by both the employer and

the employee; and

► The aggregate of the taxable and exempt income for a couple exceeds

Rs 30,000 per month


► Solidarity levy

► Individuals with a chargeable income and dividend income

exceeding Rs 3.5million will be liable to the solidarity levy: the rate

is 5% of the amount in excess of Rs 3.5million

► Increase in Income Exemption Thresholds (“IET“)

► Stepped increase in IET rather than a flat increase across all

categories

► New category of IET introduced for taxpayers with 4 or more

dependents


► Relief for medical insurance premiums

► Increase of Rs 3,000 for the taxpayer and the first dependent

accompanied by increase of Rs 4,000 for subsequent dependents

► Deduction for household employees

► Wages of household employees will be deductible against annual

taxable income of the taxpayer subject to a maximum of Rs 30,000

where he is fully compliant regarding social security contributions

obligations.

► Exemption from income tax

► Basic invalidity pension, carer’s allowance and contributory invalidity

pension will be exempt from income tax for disabled persons


► Corporate Social Responsibility

► The mandatory contribution of the CSR liability to the National

Foundation through the MRA will be 50% instead of 75% for CSR

Fund set up as from 1 January 2018

► Companies will be allowed to spend 50% of their CSR liability to

implement their own CSR projects for one additional year

► Poverty eradication

► Social and low income housing units will be constructed

► Squatters in selected regions will be relocated

► The limit of 90% for credit facilities granted by commercial banks will

be removed for first time buyers of residential property


► Public sector reforms

► Establishment of the Mauritius National Investment Authority to

invest the surplus funds of the NPF and NSF

► The funds of other public sector bodies will be invested as well

► Investments will be made locally and globally


Building more resilient macro-economic fundamentals

Fifth challenge

Building more resilient macro-economic fundamentals

► Public finance management

► All revenues and expenses of the Build Mauritius Fund and the

National Resilience Fund will be consolidated

► Total revenue is projected to increase to Rs 112.2billion, out of

which it is expected that Rs 92.3billion will source from tax receipts

Disclaimer

Disclaimer

► The information in this pack is intended to provide only a general

outline of the subject covered. It should not be regarded as

comprehensive or sufficient for making decisions, nor should it be

used in place of professional advice.

► Accordingly, Ernst & Young accepts no responsibility for loss arising

from any action taken or not taken by anyone using this pack.

► Further, the information in this pack will have been supplemented by

matters arising from any oral presentation by us, and should be

considered in the light of this additional information.

► If you require any further information or explanations, or specific

advice, please contact us and we will be happy to discuss matters

further.

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