Income tax incentives: 2019-2020 measures

The 2019-2020 Budget proposed several fiscal measures that aims at consolidating the existing tax framework and at aligning the island’s tax regime with international standards. The government announced further investment in the public infrastructure and in incentives related to innovation-driven activities. These will establish Mauritius as a fintech hub. Additionally new legislations will be introduced in terms of controlled foreign companies.

Tax Holidays for companies

  • Innovation Box Regime: Companies that have been recently set up and that are engaged in innovation-driven activities will be able to benefit from a tax holiday of 8 years on income derived from their intellectual property assets developed in Mauritius. However, they must meet pre-defined requirements that are in line with BEPS regulations. Additionally, as from the 10th of June 2019, even existing companies could benefit from the eight-year tax holiday.
  • E-commerce platforms: Companies that aim to operate an e-commerce platform and that will be implemented before the 30th of June 2025 will be granted a 5 year tax holiday.
  • Peer-to-Peer landing: In 2018, the FSC published the Peer-to-Peer Lending Rules. Following this, it has been announced that Peer-to-Peer lending operators will benefit from a 5 year tax holiday on the condition that they become operational before the 31st of December 2020.

These measures are in line with the government’s vision to position Mauritius as a hub for innovation-driven activities.

Taxation of banks

  • Income derived by banks from Global Business Companies will not be subject to the levy under the Value Added Tax Act 1998.
  • Banking institutions with an operating income more than 1.2 billion MUR per year will attract a levy of 4.5% on their operating income. This levy will not be categorised as a deductible expense under corporate tax and no foreign tax credit will be allowed.
  • Banks which offer a minimum of 5% of their new banking facilities to SMEs in Mauritius, to companies operating in agricultural, manufacturing or production of renewable energy in Mauritius or to operators in African or Asian countries will be able to enjoy a tax rate of 5% on its chargeable income in excess of its chargeable income in the base year (2017/2018).

Carry Forward of Unrelieved Tax losses

The government further announced that a company will not be able to carry forward its accumulated losses if there is a change in the ownership of the company. However, in the case of a manufacturing company, the latter will be allowed to do so if the appropriate Minister deems that it is in the public interest to do so. This is subject to the fulfilment of conditions related to safeguard of employment. It should be noted that the above recommendations were announced by the current Prime Minister, Minister of Home Affairs, External Communications and National Development Unit and Minister of Finance and Economic Development as part of the 2019/2010 tax changes. However, the Budget proposals may be significantly amended before enactment. As such, do not hesitate to consult us if you wish to determine a specific investment strategy related to specific circumstances.

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