What the Finance Act 2013 means for Mauritians
Below we summarise the most significant tax changes brought about by the Finance (Miscellaneous Provisions) Act 2013 which came into force in Mauritius on 21 December 2013.
Taxpayers need now be aware that:
The acquisition of patents is a qualifier for capital allowance.
Interest is subject to TDS on payment to non-residents other than interest paid by GBC 1, banks, or non-bank-deposit-taking institutions, subject to any applicable DTA in force.
- As from January 2014, where a taxpayer’s accounting period ends in the month of June and he has no tax payable or a loss, he may submit an annual tax return up to 15 January of the following year.
- As from the year of assessment 2015, the limitation to the income tax exemption for private freeport developers is removed such that they will also be exempt from income tax indefinitely similar to freeport operators.
- CSR contribution of 2 percent on prior year chargeable income is now also extended to resident sociétés as from year of assessment 2015.
- The Act provides for updated rates of special levy on banks for year of assessment 2014 and 2015. Thereafter as from year of assessment 2016 the rates will be reduced to 1.7 percent on book profit and 0.5 percent on operating income. Both income derived by the registered owner of a foreign vessel and income from chartership of ships are now qualified as exempt income.
- A company producing certain goods/products which incurs capital expenditure exceeding 100 million rupees during the period 1 January 2014 to 31 December 2018 on new plant and machinery which are used in its activities may claim a tax credit from its income tax payable.
The main changes brought about by the Act are:
- From 1 January 2014 an individual may claim relief in respect of actual contributions made to an approved provident fund which has as its main object the provision of medical expenses for himself and his dependants in respect of whom he has claimed a deduction.
- The current relief in respect of interest paid on housing loan secured by mortgage or fixed charge on immovable property and used exclusively for the purchase or construction of the house of the taxpayer has been extended to loans from:
- Sugar Industry Pension Fund
- Development Bank of Mauritius to its employees
- The Statutory Bodies Family Protection Fund to its members
- From 1 January 2014 there will be an increase of MUR 5,000 in respect of all categories of income taxpayers (Category A-F).
Value Added Tax
The Act provides for:
- Where there is transfer of immovable property as part of a going concern on cessation of business to a registered person, no VAT remains applicable.
- The Director-General to use his discretion in repaying a claim for refund of VAT suffered on capital goods in full or partly.
- A VAT Refund Scheme available to Small Planters, Fishermen, Breeders, Apiculturists and Bakers. This will become permanent with a view to enhance local production and self-sufficiency.
- A VAT Refund Scheme to help people to own a house. Under this Scheme, a person satisfying certain conditions may apply for a refund of VAT incurred on the construction of his residential building by a building contractor or the purchase of a residential apartment from a property developer.
Property Taxation and Duties
The Act provides that:
- The Registrar General may waive penalty charged on undervaluation of property where the Land Transfer Tax and Registration Duty on valuation of property due as at 8 November 2013 are cleared by 30 September 2014.
- The current exemption from payment of Land Transfer Tax and Registration Duty, arising on the transfer of a portion of freehold land to a company registered under the Construction of Housing Estates Scheme with the Director-General of the MRA, is being extended by an additional year to 31 December 2014.
- The Land Transfer Tax applicable on resale of an IRS/RES will be the higher of:
- In the case of an IRS, 5 percent and USD 50,000
- In the case of an RES, 5 percent and USD 25,000
- Also, Registration Duty on acquisition of an RES will be the higher of 5 percent and USD 25,000.
Tax Card 2014
Our annual Tax Card summarises most taxes for the fiscal year 2014. It serves as a quick reference for income taxes and VAT compliance in Mauritius.