The new Minister of Finance, Vishnu Lutchmeenaraidoo, presented his first budget on March 23 2015. He qualified the budget as a no-tax budget, although it is perhaps more accurate to describe it as a no-new-tax budget. It is clear that the budget is aimed at boosting growth and investment.
Some of the salient features of the budget relevant to investors are outlined below.
Financial services, regulatory framework and global promotion
The Banking Act will be amended to exempt foreign banks who lend to global business companies or specified entities from the need to have a moneylender licence, and a special Financial Sector Incentive Scheme will be set up to attract international asset and fund managers to relocate their front-office operations in Mauritius. The Financial Services Promotion Agency will be reactivated for more effective promotion campaigns, especially to diversify the country's global business activities in Africa. Further, the Board of Investment will post eight trade and investment managers in strategic cities around the world (Beijing, Geneva, Pretoria, London, Moscow, Mumbai, New York, and Paris).
The Government will cooperate fully with the Indian authorities to bring a fruitful conclusion to discussions on outstanding issues relating to the Double Taxation Avoidance Agreement. Also, the role of the Mauritius Africa Fund will be redefined to concentrate on the development of Special Economic Zones (SEZ) in African countries.
The Bank of Mauritius will provide market makers with an exit mechanism in order to revitalise the secondary market for government securities; the Insurance Act will be amended to enable the issue of insurance policies in digital format; and, a new Financial Services Institute will be set up to provide specialised training courses focussed on actual needs of the industry.
The Income Tax Act will be amended to exempt non-resident corporate bond holders from withholding tax. It will also be amended, along with the VAT Act, in various ways to simplify the tax administrative burden of companies; certain small companies will benefit from a corporate income tax exemption for eight years and will be exempt from the deduction of withholding taxes (but not PAYE).
The threshold for compulsory VAT registration will increase from MauRs4 million ($110,000) to MauRs6 million of annual turnover, and the deposit required from a taxpayer to object against a tax assessment will be reduced from 30% to 10%.
Nigaar Abubaker-Esmael and Mushtaq Namdarkhan of BLC Chambers