Budget 2018-19 pursues the transformative path mapped out in a spirit of unity - "LAME DAN LAME" and paves the way towards the creation of new dynamics to increase the purchasing power of those at the lower rung of the economic ladder. Measures have been shaped to ensure strong and stable macroeconomic fundamentals and sound public finances in view of strengthening accountability and transparency as taxpayers deserve the utmost in accountability.
The taxation policies as enunciated in the budget revolves around the seven pathways which translates the country's vision in its transformative Journey to a High Income Country which resonates in building up the strengths of our economy and society while ensuring that the middle-income class are part of the integral tax system.
With the intention of alleviating tax payers from the tax burden and increase the income of households, the Income Exemption Threshold has been increased by Rs 5 000 for each category exempting those earning an annual income of Rs 305 000 from the tax bracket. Similarly, Income Tax rate has been decreased from 15 percent to 10 percent for those earning between Rs 305,000 and Rs 650,000 annually.
The new income thresholds are as follows:
Individual with no dependent
Individual with one dependent
Individual with two dependents
Individual with three dependents
Individual with four or more dependents
Retired/disabled person with no dependent
Retired/disabled person with dependents
Provisions are also made for employees who receive a lump sum as severance, pension or retiring allowance, with an increase in the exemption threshold from Rs 2 Million to Rs 2.5 Million. Moreover, a retired person will be eligible to the enhanced income exemption threshold even if he derives emoluments provided that such income does not exceed Rs 50,000 in an income year.
Major fiscal measures including Exemptions and Reliefs are:
· Extension of the Solidarity levy on telephony service providers up to June 2020;
· the requirement for book profit of a company to exceed 5 percent of its turnover to be liable to the levy is being removed;
· the current formula for Special Levy on Banks to be maintained up to June 2019;
· introduction of a final withholding tax of 10 percent for Lotto and Government Lotteries on the winning amount exceeding Rs 100,000 which will also apply to casinos and gaming;
· increase in the additional deduction for tertiary sector;
· an individual investing in a rainwater harvesting system for his house will be allowed to deduct same from his taxable income;
· profit charge payable under an Islamic Financing arrangement for the construction of a house will qualify for interest relief if the arrangement is secured on immovable property;
· Insurance Industry Compensation Fund to be exempted from income tax;
· investment tax credit of 5% over 3 years will be granted in respect of expenditure in new plant and machinery (excluding motor cars) by a company importing goods in semi knocked-down form on the condition that at least 20% local value addition is incorporated;
· the Deemed Foreign Tax Credit regime available to companies holding a Category 1 Global Business Licence will be abolished as from 31st December 2018;
· introduction of a partial exemption regime to all local companies whereby 80% of specified income will be exempted from income tax;
· introduction of new tax regimes for banks;
· under the Corporate Social Responsibilty, companies can continue to contribute 50% of CSR (instead of 75%) to the MRA upon approval of the National CSR Foundation; and
· Five-year tax holiday for Mauritian companies investing in the Special Economic zones; and
· Under the Work@ Home scheme, employees will be granted double deduction for tax in the first two years and an annual tax of 5% for the first three years regarding investment in IT system.