The Mauritius Budget for the fiscal year 2024-2025 heralds significant tax reforms aimed at nurturing a robust environment for foreign investors. These changes are strategically implemented to boost economic resilience, drive sustainable development, and align with global regulatory standards. Blue Azurite gives you a detailed overview of the key tax amendments and their implications for foreign investors considering Mauritius as a business destination.
Corporate tax reforms
Introduction of the Corporate Climate Responsibility (CCR) Levy
A pioneering addition to the tax structure is the Corporate Climate Responsibility (CCR) Levy, which mandates a 2% levy on the profits of companies. This levy targets enhancing environmental sustainability but exempts companies with annual turnovers below 50 million Mauritian rupees. The revenue generated from this levy will fund initiatives to protect and restore Mauritius’ natural ecosystems and tackle climate change challenges.
Revisions to the Partial Exemption Regime (PER)
The Partial Exemption Regime (PER) has been modified to include:
- An 80% partial tax exemption on income derived by companies holding a robotic and AI-enabled advisory services license, contingent on adherence to substance requirements.
- Similar exemptions are available for closed-end funds from sales of money market or debt instruments and for Payment Intermediary Services (PIS) license holders.
- A clarification that management companies will not receive partial exemptions on income from CIS administrative services provided to a CIS license holder.
Adjustments for specific sectors
Significant adjustments have been made for the medical, biotechnology, and pharmaceutical sectors. Income derived from intellectual property assets by companies in these industries will now be taxed at 15%, a substantial increase from the earlier rate of 3%. This adjustment is intended to conform to international taxation standards.
Enhanced tax incentives for innovation and social contributions
Expansive tax exemptions
The government is committed to providing continuous support for digital and infrastructural innovation through the following measures:
- A 100% tax exemption on gains from the sale of virtual assets and virtual tokens.
- A 100% tax exemption on interest earned from bonds issued by a public sector company to fund infrastructure projects, pending approval from the Minister of Finance, Economic Planning, and Development.
Additional deductions and credits
- A generous 300% deduction is offered for donations to NGOs working against drug abuse, gender-based violence, poverty alleviation, and animal protection.
- A 200% deduction on expenses to support registered arts professionals.
- A tax credit of 25% for corporate expenditures on establishing nurseries.
Boosts for manufacturing and creative industries
Incentives for Manufacturers
An investment tax credit of 15% over three years will now include expenditures on AI and patents, recognizing these as critical components of modern manufacturing. Furthermore, recycling processes have been classified under manufacturing activities, making them eligible for existing manufacturing incentives.
Expansion of the Premium Investor Certificate (PIC)
The PIC has been extended to encourage private investments in the creative industry, covering new sectors such as concert venues and theaters. This move aims to stimulate the cultural sector, creating a more vibrant local economy.
Reforms to the Freeport Act and VAT policies
Freeport Act changes
The amendments to the Freeport Act allow a company to hold both a Global Business Licence and a Freeport certificate, although such entities will not qualify for the tax holidays previously available to Freeport operators.
VAT adjustments
Enhancements to VAT (Value Added Tax) regulations include:
- A mandatory specification of the conversion rate into rupees on VAT invoices issued in foreign currencies.
- An extension of the time limit for the Mauritius Revenue Authority (MRA) to examine VAT returns to four years.
Support for Green Initiatives
The Mauritian government extends a 10% refund (capped at MUR 200,000) on the importation value of electric cars and goods vehicles until June 2025, promoting the adoption of environmentally friendly transportation options.
Conclusion
Overall, the Mauritius Budget 2024-2025 introduces transformative tax reforms that cater extensively to foreign investors. By aligning its tax policies with global standards and promoting sectors like technology, environmental sustainability, and the arts, the country is reinforcing its position as an attractive and progressive investment hub. These strategic changes promise to enhance the country’s economic landscape, making it an even more appealing destination for international business operations. If you’re looking to start a new business venture in Mauritius, learn how these reforms will impact your project by contacting Blue Azurite. Our team of experts is here to guide you through the procedures to make your business project a success.
