pwc budget brief nov2010

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Go in g o v er t h e N a t io n a l B u d g e t 19 November 2010

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Please note that Budget proposals may be

su ect to amendments durin de ates in

Parliament. We therefore recommend you to

decisions based on these measures. PwC will

2011 once it is voted.

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ContentsGoing over the National Budget – November 2010



André Bonieux, Senior Partner, comments on the National Budget

Tax Perspective

Public Finance

Sector Review Agro-Industry

Banking, Financial Services & Offshore

Employment & Social Measures

Energy & Sustaina e Deve opment

ICT

Hospitality, Tourism & Leisure

Manufacturin

Public Infrastructure

Real Estate

SMEs

Taxation and Tax Tables

About PwC

Contactin Us

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Back to ContentsGoing over the National Budget – November 2010



(1 of 2)

André Bonieux, Senior

Partner, comments on theNational Budget

The Honourable Pravind K. Jugnauth, Vice-Prime Minister,Minister of Finance and Economic Development, came up with

Instead, and against expectations, it appears that Government didhave reasonable fiscal buoyancy as the revenue shortfall of

a set of disappointing proposals in his 2011 budget speech.

The Minister talked of productivity challenges, that the time hadcome ‘to cut the links with a social policy framework that wasexcessively centred on giving and spending’, and that we should

Rs3.8bn was due to reductions in dividends and EU grant monies.

We also expected a much more elaborate discussion on the deficitoptions and strategies for the medium term. These issues wereunfortunately not addressed.

.

The measures announced, in our view, fell well short of theseambitious statements.

Driving productivity at the national level is about Government

So instead of less Government, measured through a lower deficit,it looks like we will get more of the same.

Next on the social policy framework, we heard of a vast number of schemes, new bodies, special tax exemptions, all of which will

spen ng ess an orrow ng ess. a was one a ou edeficit?

With GDP growth rates of 4.1% in 2010 and 4.2% expected for2011, clearly the envy of many countries, we feel that theMinister had am le room for manoeuvre to act on the deficit.

pro a y requ re ye more c v servan s o a m n s er an con ro .The budget speech had a strong political undertone with monies being paid out to various categories of citizens depending on a mix

of seemingly complex conditions. We are at a loss as to how weshall be moving away from that ‘social policy framework that was

’

Instead the budget deficit is only expected to move from 4.5%this year to 4.3% in 2011. We would have understood this levelof deficit had Government suffered from a drop in its fiscalrevenues.

.

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Back to ContentsGoing over the National Budget – November 2010PwC



(2 of 2)

André Bonieux, Senior

Partner, comments on theNational Budget

On the empowerment front, the Minister has reintroduced

taxation on dividends, a tax that was removed in the early 90’s.

All is however not negative. Tax on interest and the NRPT have

been abolished and new homeowners will get an additionale ra e s a e a 10 . ax ng v en s s, n our v ew, a

highly retrograde measure as income is effectively taxed twiceand is a clear disincentive to entrepreneurs and investors. Morecontradictory, the Minister removed taxation on interest as ‘it was a tax that weighed too heavily on our elders’ and yet is

n eres exemp on on acqu s on o a new ome.

Further, we have for years lobbied for refunds fromGovernment (including the MRA) to be interest bearing. TheMinister did not give much detail but announced measures to

pena s ng ose very e ers a oo g er r s s an nves e

in private and public companies! The impact of this tax on theflight of capital to safer shores should not be underestimated.

Moreover, all gains from sales of land and immovable property shall be taxable at 1 % exce t if the develo ment is in the name

,

and that delayed payments would be subject to interest – weshall see!

In conclusion, we believe the Minister should have shown muchmore fiscal discipline and gone for a deficit of around 3.75%.

of an individual, in which case the rate will be 10%.

It is clear that we shall be moving back to a world where tax

planning was a serious activity for many people. Again, at PwC, we believe that the way forward is through simplification of our

Taxation of dividends is a definite ‘no go area’ and we can only be extremely concerned as to measures in this area in future years.

ncome ax aws as s mproves co ec on an comp ance.

Going over the National Budget – November 2010

5

Back to Contents

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(2 of 2)

by Anthony Leung Shing,

Tax Director

Solidarity taxes have now become a common feature of the National Budget and, yet again, the Minister hasappealed to those who can afford to contribute more. The extension of the application of the Special Levy on banks and the Solidarity Levy on telephony companies are such examples. The Minister has gone even

further and introduced a new levy on the Segment A banking activities to compel the banks to contributemore. The Solidarit Tax has also been extended to individuals, whereb a erson with a total incomeexceeding Rs2m will pay a solidarity tax of 10% on his exempt income. This effectively means theintroduction of a tax on dividend income for individuals; however, dividends would still be exempt in thehand of a recipient company. It is an agreed fact that the taxing of dividend is economic double taxation andmost modern tax jurisdictions are moving away from such a concept. Further, at a time where theGovernment is seeking to stimulate SMEs, entrepreneurship and owner-managed businesses, such a tax would be detrimental.

The Minister also introduced a new 10% tax on individuals in respect of any gains (exceeding Rs2m) derivedon sale of land and immoveable properties. In many instances, such gains made by an individual werepreviously deemed to capital in nature and therefore not subject to tax in Mauritius. In essence, this 10% tax

.

Amidst these new taxes, the Minister has also provided for some relaxation in taxes, with the abolition of the

National Residential Property Tax (“NRPT”) and the exemption of interest income with retrospective effectfrom 1 January 2010. However, the removal of these taxes represents mere promises which the Ministerrovided durin his electoral cam ai n and much of the rebalancin has been achieved throu h the

introduction of new taxes or so-called solidarity taxes to promote social justice. Overall, the fiscal burden istargeted at the profitable companies and the high income earners, with the objective to take from the “haves”to give to the “have not”.

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The 2010 budget deficit is projected at around 4.5% as announced in2009. This reflects lower than expected public spending (Rs4.2bn)combined with lower grants being received in 2010 (Rs2.6bn). We

also note a deficit in financial transactions mainly due to the non-realisation of e uit sales of Rs1.5bn.

The budget deficit is expected to be around 4.3% of GDP in 2011 and4.1% in 2012. Public finances will not return to below the 4% mark until 2013 (deficit of 3.9% of GDP) on the assumption of 4.5%economic growth.

Despite the reshuffling of tax measures, tax revenue is forecast toremain roughly the same as a percentage of GDP from 2010 to 2013,slightly above 18%. No major change is expected in the level of grants.

Public spending in 2011 is expected to amount to Rs84.0bn, representing a 10.2% increase over 2010 expenses of Rs76.3bn.

Public sector borrowing is estimated at around Rs180.4bn (60.7% of GDP) in 2010, up from Rs168.1bn (60.0% of GDP) in 2009.

The forecasts show a further surge in public borrowing to Rs214.5bn (a record 61.1% of GDP) in 2012. This reflects the effects of ncrease overnmen spen ng n an . orrow ng as a percen age o s en expec e o ec ne n .

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ec o r ev ew

Agro-Industry

Banking, Financial Services & Offshore

Em lo ment & Social Measures

Energy & Sustainable Development

ICT

Hospitality, Tourism & Leisure

Manufacturing

Public Infrastructure

Real Estate

SMEs

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-

• The measures announced under the ERCP in August are beingimplemented, including the decision to reduce the Global Cess

• Small planters, relying on sugar income only, will benefit from

the reintroduction of the tax exemption on the first 60 tonnes

• Recommendations in view of enhancing the viability of sugarproducers will be implemented through amendments brought tothe Sugar Insurance Fund Act

• The 80% advance scheme applicable to the 2010 sugar crop willo sugar. No su mission o income tax return wi e require

• Abolition of the 15% income tax on the surplus generated fromsugar operations by Cooperative Credit Societies (CCS)

• Loans up to Rs25,000 given by CCS to their members will

a so app y to t e 2011 crop

• Appropriate measures will be taken to ensure that the VAT benefits currently provided to medium and large exporters of sugar will also be available to small planters

attract a concessionary fixed fee of Rs200 on registration andinscription of the documents

• Rs310m will be provided for the Field Operations, Re-grouping and Irrigation project to cover another 1,300

• The duty-free facility will be re-introduced on all types of doublecab vehicles (4x4) for eligible small planters, farmers,fishermen’s cooperative societies and qualified SMEs

• A National Agricultural Biotechnology Institute will be set up inec ares o an n

• Rs15m will be provided to maintain the incentives regarding

the Fair Trade Initiative. By 2012, small and medium planters will get the benefit of some 40,000 tonnes

or er o ena e e non agr cu ura sec or o u y ene romthe high tech development in the domains of agriculture, agro-industry and fisheries

• Rs15m is being provided for the Multipurpose ContainmentFacilit to ensure bio-securit

• The price of molasses sold for producing potable alcohol will be increased by Rs10 per litre of absolute alcohol representingan additional revenue of Rs300 per tonne of sugar for every planter

• Two hydroponics villages will be set up as pilot projects for smallplanters in the non-sugar sector to modernise their activities

• Rs105m will be provided (which is twice the amount disbursed

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.projects will be supported

10




,

• The potential merger of the Bank of Mauritius and FinancialServices Commission (FSC) into one single regulatory institution

• Further enhancement of the Islamic related banking business

• Any surplus generated by the activities of the FinancialServices Commission will be transferred into the ConsolidatedFund

• The Develo ment Bank of Mauritius will be transformed into y contri uting USD5m to t e Internationa Is amic Liqui ity

Management Board

• Amendments in the Banking Act to empower the Bank of Mauritius regarding monetary policy and operational matters

a Development Finance Agency to encourage commercial banks to lend to SMEs

• The Registrar of Companies will act as a one stop shop for nonregulated activities

• Companies holding a Category 1 Global Business License will be allowed to conduct business both inside and outsideMauritius instead of outside Mauritius only. The localoperations will be subject to same rate of tax as other domesticentities

• The existing special levy on banks will be extended for thenext two financial years and there will be an additional levy of 1.25% on profits and 0.5% on turnover for onshore bankingactivities

• Amendment of the Trust Act to apply the rule of perpetuity and allow unlimited duration of non-charitable purpose trusts

• Independent consultant will be appointed to review theMonetar Polic Committee framework

• Creation of a Sovereign Wealth Fund with an initial portfolioof USD500m to ensure greater stability of the foreignexchange market

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• To associate the economic development with social justice, theBudget was focused on three values namely compassion,kindness and generosity. A special attention was also given to

the most vulnerable group of the population

• The Governments introduces the housing with good living infive different schemes and increases the threshold of incometo benefit from exemption of exam fees

• Alternatives to Social Aid are also available and include both• Rs11.6 n ave een a ocate or t e mo ernisation o

learning tools, of which Rs215m will be invested next year toupgrade primary schools, Rs678m in secondary schools,Rs870m to tertiary education and Rs670m to other ministriesfor running programmes such as free transport for students

existing an new programmes at t e NEF. T e programmesmay be sponsored and are estimated at Rs5bn for the next 10 years, including:

- Training programmes to enhance employability,

• Rs8bn have been assigned to the upgrading of hospitals(Victoria, Flacq, Triolet, Agalega, etc), conducting feasibility studies for children’s hospital, patients with mental problems,and national health laboratory

- Provision of crèche facilities and after school care torelease parents, especially mothers to undertake incomegenerating activities;

• In addition to improving the health care facilities, theGovernment also aims to promote healthier consumptionhabits by increasing tax and alcohol and tobacco

• The creation of a Galerie d’Arts Nationale, Espace Culturel et

- nsur ng e we - e ng o am es w spec a ocus oncare and education of children;

- Upgrading the living environment of the beneficiaries;- Promoting harmonious community living; and

Rs100m have been earmarked for digitalising the documentsof the National Archives and implementation of MatchingGrant Scheme

- Social housing with good living.

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(1 of 2)

• The Minister continues the vision of Maurice Ile Durable(MID) which is about preventing pollution, producing cleaner,eco-efficiency, enhancing human health and quality of life,

preserving the natural landscape, and encouraging cleanrenewable ener roduction and achievin ener sufficienc

• The Government has adopted two-pronged measures toencourage eco-friendly usage of resources on the one handand apply a host of fiscal disincentives to reduce the carbon

footprint and assess its social policy

and efficiency.

• Projects worth Rs27bn (with almost Rs3bn in 2011) arecommitted to the management of solid waste, wastewater anddrainage systems. These projects include:

• T e Government wi eve op y Apri 2011, a nationaframework for sustainable buildings and construction. It will be part of the National Programme on SustainableConsumption and Production (SCP) funded by the EuropeanUnion

- Additional work on the landfill site at Mare Chicose

- Construction of a hazardous waste facility at LaChaumière

• 43 other projects will be implemented under the SCP toincrease resource efficiency, improve energy consumptionpatterns, and increase the supply and use of sustainableproducts and services

- new rans er s a on a a aum re o rep ace e oneat St Martin

• The Plaines Wilhems Sewerage Project (benefiting some65,000 more inhabitants) will proceed, and a further Rs1.3bninvested next ear in wastewater services

• Energy standards and efficiency labeling for domesticappliances will be enforced and the tax framework will bereviewed to promote the use of more energy efficient

appliances

“

• Three major sewerage projects in the regions of Grand Baie,the West Coast and Pailles Guibies

• Sewer reticulation and house connections in Port Louis and

Procurement” policy in collaboration with the United NationsEnvironment Programme and carry out energy audits in seven buildings

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(2 of 2)

• Rs30m have been earmarked for the concept of eco-villages inMauritius and Rodrigues

• The scheme for the Solar Water Heater grant is being

reinstated at Rs10,000 per household and reinforced with the

• The rate of excise duty on PET bottles, plastic bags and cans, will be doubled from Rs1 to Rs2 with immediate effect

• The MID levy on each litre of petroleum products and each kg

of coal and LPG will be increased to 30 centsco a oration o commercia an s

• Negotiations are also under way for the production of electricity from landfill gas at Mare Chicose

• The sustainable use of marine resources is encouraged,through new schemes to assist with the semi industrialexploitation of our off lagoon resources. A grant scheme of 25% on the purchase of semi industrial boats is introduced, with a budget of Rs72m earmarked for the scheme to cover allcompliant boats currently on order

• The legal framework is also adjusted so that Mauritius can benefit fully from the Land based Oceanic Industry, topped up

by a budget of Rs100m to finance Research and Development

• The fiscal s stem around motor vehicles will chan e and bealigned with CO2 emissions and an underlying study will becarried out by the IMF, which should report thereon aroundMarch 2011

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• Anticipated decrease of an average of 16% to 24% in the cost of internet broadband

• Setting up of a special purpose vehicle to ensure a further undersea cable link

• Implementation of smartcard based National Identity Card

• Introduction of e-Government across several ministries and departments to increase competitiveness and productivity

• Integration of the latest technology into the classrooms

• Capacity building through the setting up of education programmes for ICT/BPO

• Upgrade of existing computerised systems to make them more efficient and user-friendly

• Introduction of scanning technology in the Registrar of Companies to increase efficiency

• Increase in the use of on-line submission and e-payment facilities across all government services

• Computerisation of the functionalities and processes of the Mauritius Police Service to connect to the Judiciary, Office of DPPand the Prisons Service

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,

a n d L eis u r e

• Measures geared towards the promotion of tourists from non-euro zone markets, with the aim of reaching more than 50% of total tourist arrivals from these markets by 2015

• An investment of Rs1bn over the next 5 years is expected withgovernment contri ution o Rs250m as o ows:

- Rs100m to double tourist arrivals from India to115,000 by 2015

- Rs75m to attract 100,000 visitors from China by M a n u f a c t u r i n g

2015 and

- Rs75m allocated to the Russian market

• An additional Rs340m allocated for the promotion of

• Setting up of a dedicated sub fund of the Private Equity Fundto help enterprises invest in high tech ventures

,the MTPA in 2011

• Measures to align the tourism industry with the duty free

shopping paradise vision and promotion of cultural tourism

• Mobilisation of a further Rs600m through the Manufacturingand Services Development and Competitiveness (MSDC)program to enhance access to finance, strengthen institutional

support and improve access to quality business developmentservices through the Mauritius Business Growth Scheme

• Additional funding of Rs700m for the Leasing EquipmentModernisation Scheme (LEMS) and an extension of thescheme until December 2012

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(1 of 2)

The Budget focused on the public infrastructure necessary to foster both the economic growth of the country as well as address the needs of the population at large. With this vision, the Government plans to invest morethan Rs250bn over the next 10 years in infrastructure projects

Projects which were announced in previous Budgets but which are yet to be implemented or are still inprogress inc u e:

• Airport infrastructure, including the extension of the terminal capacity, investment to accommodate wide-bodied aircrafts, airport emergency runway and resurfacing of the existing runway (Rs. 11.1bn)

• Expansion of the Container Terminal at the Port (Rs3.5bn)

• Road decongestion measures such as construction of the Harbour Bridge, the Ring Road, the TerreRouge-Verdun-Ebène link road and the Bus rapid Transit System

• The trading hub of Jin Fei

• Construction of the Bagatelle Dam (Rs3bn)

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(2 of 2)

The Government also announced the following new projects:

• The upgrade of primary and secondary schools (Rs1bn), as well as the construction of a number of pre-primary schools

• Rs8bn investments in the health sector, including the completion of the New Jeetoo Hospital, the upgrading of hospitals, more, , ,

capacity at the Bharati Eye Hospital, a new medi-clinic at Triolet and a maternity unit in the area health centre in Agalega

• Rs7bn expenditure over 2011 for the enhancement of law and order, including the purchase of an Offshore Patrol Vessel(Rs1.7bn), upgrading of existing Police infrastructures, construction of a new regional detention centre at Piton, a high-security prison for 775 detainees at Melrose, a new fire station at Tamarin and the acquisition of one fire engine with an aerial platform

• Multi-purpose sport complex at Triolet (Rs60m) and St-Pierre

• Various other infrastructural projects for the welfare of children such as a shelter at Cap Malheureux and a residential drop-incentre for development and protection of children

The Government has also announced the merger of the Central Water Authority, the Irrigation Authority, the Water Resources Unitand the Wastewater Authority into one single Water Authority in order to improve the efficiency of water management in thecountry.

Other measures announced and in line with the “Maurice Ile durable” effort include:

• Replacement of old and defective pipes (Rs454m), upgrade of the pipe treatment plant at Pailles (Rs245m), drilling of new boreholes and upgrading of existing dams (Rs53m)

• Some Rs27bn worth of projects (Rs3bn in 2011) for the management of solid waste, wastewater and drainage systems.Government will invest some Rs1.3 bn next year in wastewater services.

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To facilitate land development, the Minister of Finance isintroducing the Land Productivity Enhancement Scheme(LPES) and reviewing procedures with regards to landconversion. The LPES will provide a matching platform betweenthe romoters and the market, while facilitatin land use. The

Tax will also be introduced on all profits derived from property transactions, 15% for companies and 10% for individuals (aRs2m exemption threshold applying to the latter category).

Other tax measures will include:

scheme will however not be available for residentialmorcellement developments, except for mixed commercialdevelopments.

The review of procedures includes:

• Sociétés involved in real estate business will be taxed intheir own name at 15%;

• The surcharge of 5% on Land Transfer Tax introduced in2008 will be removed;

• A clarification of the requirements relating to permits;• An application for a transfer of conversion rights to another

site may also be made for a change in use;

• New industrial leases on Pas Géométriques will allow theoffset of rental paid under the old lease against rental underthe new lease;

•• onvers on r g s may e rans erre o unre a e par essubject to a fee;

• Conversion rights may be transferable within a group of companies and between ascendants and descendants/ co-heirs

a house or bare residential land subject to certainconditions.

• The removal of certain exemptions;

• For smaller land owners, a change in the threshold forexemption from Land Conversion Tax from one to two

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19




• 100% duty free facilities will be re-introduced on all types of double cab vehicles for qualifying SMEs

• Rs600m will be mobilized through the Manufacturing and

Services Development and competitiveness (MSDC) to

• The ERCP will:

- provide guarantees to allow SMEs to raise workingcapital;

support SMEs; o w ic , Rs150m wi e use to aci itateaccess to finance

• The DBM will be transformed into a Development Finance Agency (DFA) to support SMEs

-

- provide guarantees on import loans of SMEs.

• Use of the circular migration program with France as anincubator to SMEs

• The DFA will provide lending facilities to qualified clients of amounts up to Rs5m

• The DFA will offer partial risk guarantees to commercial banks to ensure lending to SMEs

• Government will seek international assistance to draw up aplan for banks willing to engage in the SME segment

• The SME Partnership Fund will be revisited to introduceinstruments for the deleveraging of SME

• The DFA will provide technical support to SMEs

• A new coordinated institutional framework will be set up to

bring under one umbrella the Small and Medium EnterprisesDevelopment Authority, National Pay Competitiveness

• A new Private Equity Fund will be created in order to developfinancing instruments for SMEs

Council, National Institute for CooperativesEnterpreneurship, National Women Enterpreneurs Counciland Enterprise Mauritius

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a x a o a a x a es

Personal Taxation

orpora e axa on

VAT

Other

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Corporate Taxation

• To reinforce and enhance the Freeport and logistics platform,the companies in the freeport zone will be exempt from tax foranother 2 years up to the year ending 30 June 2013

• To invigorate further the global business sector and the

• In view of eradicating poverty and alleviating other socialproblems, profitable banks will continue their solidarity contribution for the next two financial years. Thus, theincreased special levy rate of 3.4% of profits and 1% of turnover will a l for the ears of assessment startin 1

omestic economy, companies o ing a Category 1 G o aBusiness Licence will be allowed to conduct business inMauritius

• The GBC 1 companies will be taxed at the same rate as the

January 2011 and 2012

• There will also be a supplementary charge for Segment A banking activities consisting of 1.25% of profits plus 0.5% of turnover. Each bank contributing to the new Private Equity

benefit from the foreign tax credits on income from foreignsources

• The Cooperative Credit Societies will be exempted from tax onthe surplus generated from sugar operations

Fund will be able to offset the amount subscribed against the

additional charge, as announced in the ERCP

• The special solidarity levy applicable to providers of fixed andmobile telephony services will be maintained for the next two

• The amount of capital allowances that can be claimed onmotor cars is limited to Rs3m per motor car

financial years. Thus, the levy will be payable for the two yearsof assessment commencing on 1 January 2011 and 2012 at therates of 5% on book profit and 1.5% on turnover of the

preceding year

PwC 23Back to ContentsGoing over the National Budget – November 2010



Other (2 of 2)

• Government will modulate taxation to promote the use of more energy efficient appliances

• The rate of excise duty on PET bottles, plastic bags and cans is doubled from Re1 to Rs2

• License fees of casinos and Gaming Houses ‘A’ are increased from Rs500,000 to Rs3.5m

• License fees of Gaming Houses ‘B’ are increased to Rs50,000

• License fees of Gaming Slot Machines are increased to Rs125,000

• Horseracing license fees for bookmakers are increased by 67%

• License fees of all other betting outlets, including totalisators, football betting outlets and bookmakersoperating through remote control communications are increased by 100%

• License fees of sweepstake organizers, local pool promoters, agents of foreign pool and operators of dartgames are increased by 50%

• The pool betting duty on foreign football matches is raised from 10% to 12%

• The rate of tax on fixed odds betting on football matches and horse racing is raised from 8% to 10%

PwC 26Back to ContentsGoing over the National Budget – November 2010

PAYE d CPS Th h ld d P l T R t



Going over the National Budget - November 2010 Back to Tax

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PAYE and CPS Thresholds and Personal Tax Rates

PAYE and CPS Thresholds

Year of Assessment (YOA) 2012 2011 2010 2009/2010 2008/2009

Income Year Ended 31.12.11

(N1)31.12.10

(N1)31.12.09

(N2)30.06.09 30.06.08

PAYE and CPS THRESHOLDS Rs. Rs. Rs. Rs.

Exempt employee - PAYE (monthly income<=)

- Non sugar 18,500 18,500 18,500 18,500 16,500

- Sugar (Inter crop) 18,500 18,500 18,500 18,500 16,500

- Sugar (Crop) 18,500 18,500 18,500 18,500 16,500

Exempt Person - CPS

Turnover for CPS THRESHOLD

Trade <= (N3) 500,000 500,000 500,000 300,000 300,000Profession <= (N3) 100,000 100,000 100,000 75,000 75,000

Rent (per month)<= 25,000 25,000 25,000 20,000 20,000

Small sugar cane and tobacco growers (N4) All All All All All

Tax Deduction at Source

Interest 15% 15% 15% 15% 15%

Royalties 10% 10% 10% 10% 10% Rent 5% 5% 5% 5% 5%

Payments to contractors and sub-contractors 0.75% 0.75% 0.75% 0.75% 0.75%

Note: N1 The tax year has been aligned with the calendar year, covering January to December

N2

A six month tax year for July 2009 to December 2009 had been introduced to align the tax year with the calendar year. The income taxes due for this period were settled by

5 April 2010

N3 Turnover is for a quarter as from YOA 2007/2008

N4 Small planters with less than 15 hectares will be exempt on their first 60 tonnes of sugar and will also be dispensed of the requirement to submit a tax return

PAYE d CPS Th h ld d P l T R t ( t )




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PAYE and CPS Thresholds and Personal Tax Rates (cont.)

Personal Tax Rates

Year of Assessment 2012

Flat rate 15%

Solidarity Income Tax on exempt income (N5) 10%

Tax on income from dealings in land and immoveable property (N6) 10%

Note: N5 Applies to individuals with total income including exempt income of more than Rs2m

N6 This will not apply to gain on properties received by way of inheritance or transferred by the parents to their heirs. Moreover, the first Rs2m of gains will be exempt.

Year of Assessment 2008/2009 to 2011

Flat rate 15%

Year of Assessment 2007/2008

1. Chargeable Income not including interest income

First Rs. 500,000 15%

Remainder 22.50%

2. Chargeable Income from Interest Income 15%

Year of Assessment 2006/2007 2005/2006

On first Rs. 25,000 of chargeable income 10% 10%

Next Rs. 25,000 20% 20%

Next Rs. 450,000 25% 25%

On remainder 30% 30%Associate in a Global Business (offshore societe) (maximum rate) (Sec 47 ITA 95) 15% 15%

I E ti Th h ld / P l R li f d D d ti



Going over the National Budget - November 2010 B

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Income Exemption Threshold / Personal Reliefs and Deductions

Personal Taxation

Income Exemption Threshold


Income Year Ended 31.12.11 31.12.10 (N1) 31.12.09 (N2) 30.06.09 30.06.08

Rs. Rs. Rs. Rs. Rs.

Category A (N3) 255,000 255,000 129,230 240,000 215,000

Category B (N4) 365,000 365,000 188,460 350,000 325,000

Category C (N5) 425,000 425,000 220,770 410,000 385,000

Category D (N6) 465,000 465,000 242,310 450,000 425,000

Category E (N7) 305,000 305,000 153,460 285,000 N/A

Category F (N8) 415,000 415,000 212,690 395,000 N/A

Note:

N1 The tax year has been aligned with the calendar year, covering January to December;

N2A six month tax year for July 2009 to December 2009 had been introduced to align the tax year with the calendar year. The income taxes due for this period weresettled by 5 April 2010. An individual is entitled to only 7/13 of the Income Exemption Threshold;

N3 Category A refers to an individual who, in an income year , does not have any dependent;

N4 Category B refers to an individual who, in an income year, has one dependent only;

N5 Category C refers to an individual who, in an income year, has 2 dependents only;

N6 Category D refers to an individual who, in an income year, has 3 or more dependents;

N7 Category E refers to a retired person who, in an income year, does not have any dependent;

N8 Category F refers to a retired person who, in an income year, has one dependent only.

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Going over the National Budget - November 2010 B

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Income Exemption Threshold / Personal Reliefs and Deductions (cont.)

Personal Reliefs and Deductions (before Y/A 2007/2008 )

Year of Assessment (YOA) 2006/2007 2005/2006

INCOME YEAR ENDED 30 JUNE 2006 2005

Rs. Rs.

Basic personal deduction (N1) 85,000 80,000

Deduction for dependent spouse (N1) 85,000 65,000

Deduction for alimony & maintenance (N2) (N2)

Deduction for dependent children (N1)

- under 18 at any time in the income year (N3) (N3)

- over 18 & receiving full time instruction at an educational institution or serving underarticles to qualify in a trade or profession or being unemployed (N3) (N3)

- attending University/Polytechnic in Mauritius (N3) (N3)

- attending University/Polytechnic outside Mauritius (N3) (N3)

- attending courses at IVTB as a non sponsored student or at

State owned or approved technical school (N3) (N3)

Deduction for dependent handicapped child (over 18) 70,000 50,000

Deduction for other handicapped person 70,000 50,000

Note:

N1 An additional deduction of Rs 70,000 is available if a person, his spouse or dependent child is handicapped;

N2 Actual amount paid - No limit ;

N3

- Infant: Rs. 30,000:- Child attending pre-primary, primary, or secondary school Rs. 30,000 + school fees not exceeding Rs. 10,000- Child attending university in Mauritius Rs. 30,000 +school fees not exceeding Rs. 80,000- Child attending university abroad Rs. 110,000

C t T R t d T C dit




PwC

Corporate Tax Rates and Tax Credits


Income Year (IY) Ended 30 June 2009

Income Year (IY) Ended 31 December (N1) 2011 2010 2009

Corporate Tax Rates - Part II of First Schedule to the ITA 1995

(a) Tax incentive companies

1 Export enterprises

Allcompanies

exceptcertain ICTcompanies

andFreeport

companiesare subject

to tax at15%

Allcompanies


andFreeportcompaniesare subject

to tax at15%

Allcompanies



to tax at15%

Allcompanies



to tax at15%

Allcompanies



to tax at15%

2 Strategic local enterprises

3 Modernisation & expansion enterprises

4 Industrial building enterprises

5 Pioneer status enterprises

6 Companies registered with SMIDO

7 Export services enterprises8 Company operating an aerodrome

9 Hotel development company

10Listed investment trust companies or approved investmentinstitutions

11 Authorised mutual funds

12 Trustees of unit trust schemes

13 Housing development companies

14 Polyclinic providing health services15 Manufacturing companies

16 Category 1 global business company (N2)

17 Offshore societe opting to be taxed as company

18 Companies engaged in the management of venture capital funds &strategic local enterprises

19 Venture capital fund

20 Bus companies

21 Agro-based companies22 Agricultural companies (other than sugarcane cultivation)

23 Leasing companies

24 A company deriving at least 75 per cent of its gross income fromconstruction activities in Mauritius

25 Companies authorized by the Financial Services Commission toconduct specified business



Corporate Tax Rates and Tax Credits (cont )




PwC

Corporate Tax Rates and Tax Credits (cont.)


Income Year (IY) Ended 30 June 2009

Income Year (IY) Ended 31 December (N1) 2011 2010 2009

Corporate Tax Rates - Part II of First Schedule to the ITA 1995

(b) Other companies

1 ICT companies engaged in BPO back office operations, callcentres or contact centres (up to 30.06.2012)

5 5 5 5 5

2 Companies operating in the Freeport Zone - applicable rate depends on type of licence (exemption will apply up to YOA 2013)

0,15 0,15 0,15 0,15 0,15

3 Societes in real estate business 15 N/A N/A N/A N/A

4 Other companies including non-resident societes 15 15 15 15 15

5Information and Communication Technology Companies(certificate in force on or before 30.09.2006) – on servicesprovided to non-residents

Exempt

6Companies under the Investment Promotion (RegionalHeadquarters Scheme) (certificate in force on or before30.09.2006)

Exempt for 10 years

7 Small and Medium Enterprise Companies Exempt 4 years

Corporate Tax Credits (N11)

Investment tax credit N/A N/A N/A (N4)

Modernisation and expansion N/A N/A N/A (N5)

Exports N/A N/A N/A (N6)

Limitation to tax credits N/A N/A N/A (N7)

Foreign tax credits (N8) (N8) (N8) (N8)

Alternative Minimum Tax (AMT) Alternative Minimum Tax (AMT) (N3) (N3) (N3) (N3)

Corporate Tax Rates and Tax Credits (cont )




PwC

Corporate Tax Rates and Tax Credits (cont.)

Tax Deduction at Source Rate of tax Rate of tax Rate of tax Rate of tax Rate of tax

Year of Assessment 2012 2011 2010 2009/2010 2008/20

Royalties 15% 15% 10% 10% 10%

Rent 5% 5% 5% 5% 5%

Payments to contractors and sub-contractors 0.75% 0.75% 0.75% 0.75% 0.75%

Payments to providers of services 3% 3% 3% 3% 3%

Note:

N1 The tax year which previously ran from 1 July to 30 June has been aligned with the calendar year.

N2 These companies are liable to tax at an effective rate not exceeding 3% on their foreign source income.

N3 The rate of Alternative Minimum Tax (AMT) is 7.5% as from YOA 2007/2008 (previously 5%).

N430% of investment spread equally over 3 years from the year of investment limited to Rs 300,000 per annum. Special tax credit up to 60% of equity will beavailable over a period of 6 years in respect of investment in spinning, dyeing and weaving companies. Not available to tax incentive companies.

N5 10% of investment spread in any proportion over 3 years from the year of investment. Not available to tax incentive companies.

N6 Depending upon their volume of their export sales, companies may obtain a tax credit of up to 40%.

N7 Credits under Sections 69, 70 and 71 are limited in such manner as not to reduce the tax payable to less than 15% of chargeable income.

N8 The lesser of foreign tax paid and Mauritius tax attributable to foreign income.

N9 These companies are liable to tax at an effective rate not exceeding 3% (previously 5%) on their foreign source income.

N10 Special tax credit of 60% of equity of these companies available to the subscribing company.

N11 No tax credits and tax holidays will be available as from year of assessment 2007/08 except to existing beneficiaries.

Capital Allowances – Year of Assessment 2012 Annual

Allowance

Plant & machinery 35%

Hotels 30%

Computer and electronic equipment 50%

Commercial premises including shops and shopping malls, offices, showrooms, restaurants and other entertainment placesand clinics

5%

Motor Vehicles (Maximum Rs3m of allowances per vehicle) 25%

Equipment and machinery costing less or equal to Rs 30,000 100%



PwC 3 5




PwC firms provide industry-focused assurance, tax and advisory services toenhance value for their clients. More than 161,000 people in 154 countries in firmsacross the PwC network share their thinking, experience and solutions to developfresh perspectives and practical advice. See pwc.com for more information.

"PwC" is the brand under which member firms of PricewaterhouseCoopersInternational Limited (PwCIL) operate and provide services. Together, these firmsform the PwC network. Each firm in the network is a separate legal entity and doesnot act as agent o PwCIL or any ot er mem er irm. PwCIL oes not provi e any

services to clients. PwCIL is not responsible or liable for the acts or omissions of any of its member firms nor can it control the exercise of their professional judgment or bind them in any way.

PwC 3 6




Tax (1 of 2)

Dealing with m ulti-layered tax issues r equires mu lti-talented tax advisor s

Advisory • Advice on tax efficient international structure and policies

• Select the right jurisdiction• Advice on cross border financing and treasury solutions• Assist in registering as an employer with the Mauritius Revenue Authority and the

Ministry of Social Security • Application for occupation permit for expatriates• Assist in setting up offshore companies and securing relevant licences

• A vice on Income Tax Treaties, pro it repatriation an oss uti ization

• Structuring of tax efficient supply chain and shared services• Optimising post deal tax structures• Advice on tax efficient exit

om p ance• Preparation /review of tax computation• Review of the financial statements (including disclosure notes) for any items which

may impact on the tax computation• Re-computation of the supporting schedules to ensure accuracy, where relevant •

• Use of our technical and sector expertise to assess any potential tax risks, includinglatest tax cases and issues which may be of relevance

• Review of any current and future tax developments which may impact on the company'staxation affairs

•

More information on w w w. wc.com m u

PwC

• Assistance in filing the tax computation and return as appropriate

3 8






Tax (2 of 2)

Dealing with m ulti-layered tax issues req uires mu lti-talented taxadvisors

Investigations• • Compile, process and submit information to the MRA • Assist in respect of site visits effected by officials of the MRA • Prepare the grounds of appeal for representations to the Assessment Review

Committee• Attend ro-forma and informal meetin s• Discuss and negotiate on your behalf with the MRA • Prepare the grounds of objection to the assessment• Assist in respect of site visits• Assist lawyers in case preparation, including research on tax cases and technical

support

VAT• Review of VAT recording procedures and systems, including any recommendations;

• Provision of VAT advice on projects;• Optimisation of the input VAT recovery process; and• Performing VAT health checks to identify potential VAT exposures, including:

• Review of VAT returns;• Detailed analysis of the VAT listings, including coding and classification;• Review of VAT control procedures, recording, and systems;• Review of VAT reconciliations and analysis of differences;


PwC

• Quantification of any potential VAT liability, including penalties and interest.

3 9






Consulting (1 of 2)

Helping business to work smarter and gro w

PwC helps clients to design, manage and execute lasting change. Increasingly, value iscreated across a complex network of partners, suppliers, customers, regulators and

stakeholders. Survival and success depends on collaboration amongst these.

Our Consultants bring together a full range of functional and industry skills to helpour clients in this environment:

Risk Advisory

Risk Advisory helps management, the board and third parties enhance andstrengthen their control and corporate assurance frameworks, addressing thehazards and opportunities of risk across their organisations.

n erna u erv ces• Internal audit outsourcing• Internal audit co-sourcing• Internal audit advisory

• Effectiveness reviews of internal audit

•

n erpr se sManagement

• Risk Function Effectiveness– Diagnostic review of corporate / enterprise risk frameworks

pera ona ec veness

• Process Improvement –review of businessprocesses and systems, benchmarking them withleading practices and


• Quality Review Audits• Training services• SAS 70 audits and other

Compliance audits

• Design and implementationof an enterprise businessapproach to risk

m0aking recommendationsfor improvement,methodology training andapplication.

PwC 4 0






Consulting (2 of 2)

Outsourcing

Our strength is in our network of talented people, vertical approach, knowledge,and technology.

Outsourcing to PwC in Mauritius makes sense as, while we have performancestandards in line with the PwC Global standards, we are a lower cost regioncompared to other outsourcing hubs in Europe and North America. Our staff areperfectly bilingual in English and French, fibre optic connectivity to the rest of the world is established, and we are situated in a favourable time zone.

People and Change

PwC's People and Change practice recognizes the important role people play in

people a sustainable source of competitive advantage. We work closely with clientsto offer practical, multi-disciplinary approaches to create environments in whichtheir people can work most effectively.

More information on www. w c.co m m u

PwC 4 1


http://www.p/

http://www.p/



Deals

Helping businesses succeed

PwC Deals Services provides tailor-made financial advisory services to a broad range of clients whenever their capital structure is modified in someway or a share based

transaction is under consideration.

Our services combine advanced technical and technological resources with commercialawareness based on our in-depth direct experience of industry.

Corporate Finance

We work closely with clients and our services are designed to help them reach their

strategic goals by identifying opportunities arising and implementing investment decisions.

Transaction Support Services

We help clients identify and focus attention on the factors in business that are critical totheir future success. We reconcile investors’ need for profit with the requirements of themarket for transparency.

Valuation services

complex factors.

Property Development

We advise clients on land realisation policy and project implementation based on ourMore information on w w w. wc.com m u

PwC

,Schemes.

4 2






Deals

Business Recover y Services

Pre-Execution: Helping you to re-building value andtrust in distressed situations

Execution: Helping stakeholder srecover value

I n d e p e n d e n t

b u s i n e s s

rev i ew

F i n a n c i a l

r e s t r u c t u r i n gO p e r a t i o n a l

r e s t r u c t u r i n g

C o r p o r a t e

s i m p l i fi ca t i on

C o r p o r a t e

i n s o l v e n c y

Where businesses For companies, their Are you experiencing We assist Where a business isare underperforming,

in distress or in crisis,we provide tailoredbusiness reviewservices either for

lenders, shareholders

or other stakeholdersin businesses facingfinancial under-performance or crisis,

one or more of the

potential issues withyour business?

• Squeeze onworkin ca ital

organisations that

need to reduceoperating costs andachieve a simplifiedmore transparent

facing financial

distress orinsolvency, we maybe able to help saveit if action is taken

or for the businessitself. These servicesclarify the situation

for both parties andallow clearer

restructuringsolutions and helpbuild a platform for

recovery.

• Unexpectedcollapse of

profitability• Unsustainable

by dissolving inactivecompanies that havefulfilled their

economic purpose.

.Alternatively, we canhelp financialstakeholders to

recover value in aninsolvency.

eva uat on o t eavailable options.

running costs

• Forecast covenantbreach of loanagreementMore information on

PwC 4 3


. .

http://www.pwc/

http://www.pwc/



www.pwc.com mu

The comments and analysis contained in this publication are based on our understanding andinterpretation of the information available from the Budget Speech. You are thereforecautioned to consult with your tax advisor or ourselves prior to any action being taken.

PricewaterhouseCoopers Ltd, its members, employees and agents do not accept or assumeany liability, responsibility or duty of care for any consequences of you or anyone else acting,or refraining to act, in reliance on the information contained in this publication or for any

Pw C18 CyberCity, Ebène, Republic of Mauritius

.

© 2010 PricewaterhouseCoopers Ltd. All rights reserved. In this document, “PwC” refers toPricewaterhouseCoopers Ltd, which is a member firm of PricewaterhouseCoopers

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