BDO e-Budget Brief 2015/2016
1 ECONOMIC AND SOCIAL SUSTAINABILITY The three key concepts permeating the Budget are sustainable growth, employment creation and equitable sharing. The Minister of Finance through his budget provides measures to, on the one hand, lay down the foundations for a near doubling of GDP growth from the current 3.2% to 5.7% in 2016/2017, and on the other hand, meet the aspirations and needs of the population. Four pillars come up regarding investment and economic development. Public investment in major projects in the Port, extension of its geographical reach and activities, land transport and technopoles. A quantum leap for the SME sector in terms of lesser red tape, tax incentives, funding through an SME bank and operating space. Opening up the policy space for large private sector investment and initiatives: attracting asset and fund managers, encouraging the maintenance of the DTA with India, eight smart cities, fast tracking and business facilitation, opening up of air access, stepping up of the tourism sector, support to the deeply ailing construction and sugar sectors. A special effort towards the young, broadening of WiFi access, training in numerous spheres, in addition to the opportunities offered by the ICT, SME and renewable energy measures. Prior to the Budget, major steps were taken in respect of a significant increase in pension and other contributions under the Additional Remuneration Act. The Budget consolidates the social package with a comprehensive set of measures: Job creation to tackle unemployment. A Marshall Plan to combat poverty. A substantial increase of social benefits. Several incentives in respect of housing for low and middle income groups. A review of the CSR Scheme to render it more effective with a special focus on an indicative list of 38 pockets of poverty. A higher access to water and affordability thereof. The Budget also addresses issues related to natural disasters and floods, Rs 1.3 billion are being provided; transparency in respect of meritocracy, procurement and allocation of State Lands; gambling, narrowing down of number of outlets, locations as well as gambling options; and attracting the Mauritian diaspora to return home. A targeted higher growth rate, lower oil prices and control on spending are conducive to a No Tax Budget. BDO & Co. Chartered Accountants e-Budget Brief 2015 / 2016 2 BDO E-BUDGET BRIEF 2015/2016 MAURITIUS AT THE CROSSROAD Greater sharing underscores all the main policy decisions in Budget Programme Based Budgeting to Performance Based Budgeting Two Budget estimates from January to June 2015 and 12 months period from July to June 2016 ECONOMIC REVIEW Growth - around 3% over the last decade End 2014 trade deficit - Rs 76.8 billion, representing 19.9% of GDP, current account deficit Rs 39.6 billion, representing 10.3% of GDP Public sector debt – 54.2% of GDP e-Budget Brief 2015 / 2016 3 Target 2015/2016 GDP growth - 5.3%, 2016/2017 - 5.7% Main objectives of this Budget are to: a) Steer the economy towards a path of high investment, and high employment. b) Secure long term sustainable development for all. c) Achieve greater equity and social justice for one and all. d) Promote transparency and good governance in the management of public affairs. HIGH INVESTMENT AND HIGH EMPLOYMENT The 13 Mega Projects „Smart City‟ concept - a total revolution in the way we live, work and play a) The Omnicane airport city in the south-east. b) St Félix Village projects in the south. c) The Médine Integrated Park in the west. d) Roches Noires in the north-east. e) The Azuri Phase 2 project in the north. f) The Terra project in the north. g) The Highlands City in the centre. h) The Richeterre Project in the vicinity of Port Louis. 5 „Technopoles‟ at Highlands, Rose Belle, Flacq, Rivière du Rempart and Bambous. SMEs -„ Île Maurice Nation d‟Entrepreneurs‟: The SME Bank SME sector - the backbone of economy Comprehensive “One Stop Shop” approach to SME sector e-Budget Brief 2015 / 2016 4 Small and Medium Enterprises Bank (SME Bank) - provide seed capital to entrepreneurs without any need for personal guarantee One-Stop-Shop - provide under one roof, all the support, financing and information, as well as the delivery of all the permits and licenses that SMEs require to start and grow their businesses Access to working capital by the State Bank of Mauritius - dedicated desk in the SICOM Tower SMEDA - fast track mechanism to ensure that all necessary permits and approvals needed to carry out business are delivered within the minimum time 7 more SME Parks in addition to the 3 recent ones at Roche Bois, La Tour Koenig and Bambous Annual fee to Registrar of Companies for small private company with turnover not exceeding Rs 10 million - from Rs 2,500 to Rs 500 Transforming the Port-Louis Harbour: From a Destination Port to a Regional Hub Port will become a key contributor to the development of the ocean economy, creating vast opportunities for SMEs, and thousands of new jobs High investment over next five years in port infrastructure Mauritius Port Authority - new Masterplan making Port Louis harbour a hub for bunkering, seafood, transhipment, cruise and petroleum and development of a full-fledged marina Expand activities of the port, extension of berths at Mauritius Container Terminal, refurbishment of three existing quays cranes, and development of the Island Container Terminal Offshore bunkering activities to start before end 2015. Storage facilities for onshore bunkering being expanded significantly Restructuring the IRS/RES In-depth analysis of the weaknesses and shortcomings of the IRS and RES TRAINING AND HUMAN RESOURCE DEVELOPMENT SME sector - require substantial appropriately trained labour force, especially at technical and middle management level Three campuses presently under construction at Réduit, Montagne Blanche and Pamplemousses to offer courses as follows: Réduit - courses in Middle Management, ICT and other ICT-related fields. Montagne Blanche - courses, mainly in Tourism, and Hotel Management, including cruise tourism. Pamplemousses - courses mainly in health care for nurses, technicians and trained personnel in the medical field, especially in the maintenance of sophisticated medical equipment. 3000 „gradués chômeurs‟ - University of Mauritius and other qualified institutions will develop tailor-made crash courses in fields with high job prospects. Government will cover cost of fees amounting to around Rs 80,000 per student per year e-Budget Brief 2015 / 2016 5 Role and functions of the Mauritius Institute of Training and Development (MITD) reviewed – greater emphasis on training plumbers, electricians, welders, masons, carpenters, and other technicians A „Chambre des Métiers‟ – set up for greater recognition to the skills and competencies of trade persons and other technicians BUSINESS FACILITATION AND INVESTMENT CLIMATE Greater powers to the Fast Track Committee to expedite approval process and facilitate implementation of major investment projects Abolish 70 permits and licenses obsolete, and irrelevant Renewal of some types of licenses and permits annually - automatic upon payment of fees, including e-payment Possibility for renewing licenses up to 3 years Operators in tourism sector - possibility of an omnibus permit Study of the labour market and wage policy to bring it in line with need to boost investment SECTORAL REVIEW Agro industry and fishing SIFB one-off compensation of Rs 3,400 per ton of sugar for crop 2014 to planters producing up to 60 tons of sugar. Remaining categories Rs 2,000 per ton DBM will waive all interests and penalties on loans of up to Rs 100,000, to planters, fishermen and breeders, provided they pay back the outstanding capital amount within a period of 90 days Pig breeders - arrears of interest and penalties waived on loans advanced under the Pig Sector Restructuring Programme Subsidy provided to animal feed, including for cows - Rs 4 per kilo New opportunities for fishermen to engage more and more in aquaculture “Bio Farming Development Certificate” - package of incentives Rs 370 million - national wholesale vegetable market, Rs 223 million - modern slaughterhouse Manufacturing To facilitate the modernisation programme, particularly in the textiles sector, the Accelerated Annual Allowances provisions in the Income Tax Act will be improved Freight Rebate Scheme - extended to other ports in Africa and open to all shipping lines Rs 442 million to support the manufacturing sector e-Budget Brief 2015 / 2016 6 Tourism MTPA budget from Rs 390 million to Rs 560 million MTPA - restructured for greater flexibility and effectiveness More liberal approach to open air access Negotiate with airline companies for stopovers in Mauritius on the UK-Australia route Negotiations with other airlines to expand the air connectivity to Eastern Europe and Central Asia Tourism sites embellishment programme and raising the standards of operators in the industry Developing the ICT sector as a Key Driver of Development Third international gateway through the installation of a new submarine cable. Whole island full broadband fibre connectivity within the next 3 years ICT Skills Development Programme extended to cover training for unemployed youths ICT companies with a minimum of 100 employees allowed a quota of foreign qualified employees Free WiFi hotspots increased from 15 to 350 Rs 125 million - National Innovation Programme to foster culture of research and development and creation of new and innovative products and services A Sound, Stable and Inclusive Financial Services Sector Special Financial Sector Incentive Scheme - attract international Asset and Fund Managers to relocate their front-office operations in Mauritius The Financial Services Promotion Agency reactivated for more effective promotion campaigns, especially to diversify Global Business activities in Africa Financial Services Institute set up at Réduit to provide specialised training courses focused on actual needs of the industry Bank of Mauritius will provide market makers with an exit mechanism Income Tax Act amended to exempt non- resident corporate bond holders from withholding tax Issue of insurance policy documents in digital format Cooperate fully with Indian authorities to bring to a fruitful conclusion discussions on outstanding issues relating to the Double Taxation Avoidance Agreement Ocean economy- a new Petroleum Bill to provide the legal and fiscal framework for exploration and exploitation of hydro- carbon resources in the Exclusive Economic Zone National Ocean Council - better coordination among all stakeholders to implement the Ocean Economy project e-Budget Brief 2015 / 2016 7 ENVIRONMENT, ENERGY, WATER AND WASTE MANAGEMENT National Environment Commission revived to create better synergy among the various stakeholders to address important environment concerns and issues National Disaster Management Centre - ensure quick response to any major unforeseen event Rs 1.3 billion for priority drain works Ban on use of plastic bags effective 1st January 2016 Mauritius Renewable Energy Agency to raise the share of local renewable energy in the electricity generation mix to 35% or even higher by 2025 Encourage households to have their own solar energy unit - total investment in such equipment deductible from chargeable income investment in solar and other renewable energy eligible for financing as well as other incentives under the SME Scheme Wastewater and Solid Waste Management Priority to regions highly vulnerable to environmental and health hazards - Rs 3 billion invested by June 2018 Rs 229 million - interim facility for the storage of hazardous wastes at La Chaumière New waste recycling facility at La Brasserie Rs 100 million for asbestos issue in public buildings Water: A Basic Human Right Every household entitled to at least 6 cubic metres of water per month free of charge Change all the defective water pipes in the network to reduce huge losses in transmission. Public Sector Investment Programme (PSIP) of Rs 20 billion to be implemented during next 8 years Water sector - Rs 3.5 billion e-Budget Brief 2015 / 2016 8 MODERNISING LAND TRANSPORT Penalty point system modified Government investing in: a) A fly-over at Decaen street b) fly-over over the Phoenix and Jumbo roundabouts c) new bridge to link Coromandel with motor way d) ferry boat between Pointe aux Sables and Baie du Tombeau Acquisition of 100 semi low floor buses OPENING MAURITIUS TO THE WORLD Economic partnership with Africa Redefine role of the Mauritius Africa Fund - concentrate on the development of Special Economic Zones (SEZ) in various African countries namely Madagascar, Ghana and Senegal Setting up a regional shipping line - expand regional trade and role of our port Posting 8 Trade and Investment Managers in strategic cities around the world - Beijing, Geneva, Pretoria, London, Moscow, Mumbai, New York, and Paris RODRIGUES AND OUTER ISLANDS Acquisition of new vessel for merchandise and passenger transport Extension of the Sir Gaëtan Duval airport - Rs 2 billion Install and operate the undersea fibre optic cable SME ICT park for ICT/BPO activities SMEs Agro-Industrial Park Develop fishing industry - provide training facilities for fishermen Training and placement scheme for Rodriguan graduates Agricultural Marketing Board to purchase whole surplus production of onion, garlic, saffron, ginger and red beans at guaranteed prices Desalination of sea water - Rs 120 million Rs 2.4 billion Budget of Rodrigues Regional Assembly for 2015 Agalega - Rs 750 million for construction of new airstrip and new jetty facilities e-Budget Brief 2015 / 2016 9 Local authorities - relocation of street hawkers. Hawkers Centre at the Northern Bus Terminal Grant to Local Authorities - Rs 2.8 billion SOCIAL REVIEW Health Care Rs 9.7 billion Budget Number of new projects implemented Round the clock services in several Mediclinics and Area Health Centres Education: Building the Knowledge hub of the future Rs 14.7 billion - to improve the quality of education, implement the nine year schooling, reform the tertiary sector, revamp and adapt vocational training New Higher Education Bill Transparent and efficient Financing Model for Publicly Funded Tertiary Education Institutions Social Security Rs 27.5 billion for social security expenditure Housing Construction of 1,000 low cost housing units Construction of 700 housing units in next two years for vulnerable families under the National Empowerment Foundation Grant for casting of roof slab from Rs 65,000 to Rs 75, 000 - families monthly income up to Rs10,000 Grant for casting of slabs up to Rs 40,000 - families monthly income between Rs 10,000 - Rs 15,000 monthly Grant for purchase of building materials from Rs 55,000 to Rs 65,000 – families earning up to Rs 10,000 monthly 436 serviced plots for families with income in the range of Rs 10,000 - Rs 25,000 The Marshall Plan Against Poverty Allow institutions contributing to CSR to take under their wings those unsustainable pockets of poverty Company takes under its wings a „cité ouvrière‟ National initiative to resolve poverty in those „poches de grande pauvreté‟. Revisit structure of CSR system e-Budget Brief 2015 / 2016 10 Companies free to allocate the 2% of CSR according to own set of priorities All existing CSR guidelines removed Law and Order Rs 7.9 billion for Police Force Recruitment of specialist forensic accountants and analysts, computer and mobile phone experts Nation Zougadère Total ban on gambling advertisement Ban on issue of new gaming and betting licenses except for casinos for five years Total ban on scratch cards Relocate all gaming houses from city centres Consumer Protection Hire purchase - maximum interest rate from 19% to 12%, penalty rate from 5% to 2% Setting up an Office of Ombudsperson on Financial Institutions Examine Report of the Commission of Enquiry on Sale by Levy Child Protection, Family Welfare and Development Gender Equality Doubling provision for joint government and civil society initiatives to support children and women in distress Increasing the capitation grant to NGOs working with children victims of abuse by 50% Youth, Sports, Leisure, Arts and Culture Government contribution to project of professional football - Rs 26 million Rs 60 million for Indian Ocean Islands Games e-Budget Brief 2015 / 2016 11 ENSURING TRANSPARENCY AND GOOD GOVERNANCE The Central Procurement Board will be restructured and have more staff to expedite allocation of contracts in a more transparent manner Greater transparency in the allocation of state lands Digital State Land Register compiled and made public to provide comprehensive data on state lands already leased and unallocated state lands that may be developed for commercial, industrial and other uses Reviewing the functioning of the Board of Directors of public sector bodies CEO‟s accountable to the Board of Directors recruited on a transparent basis Public Sector Reforms Increasing the provisions for the Trade Union Trust Fund and the Media Trust by 33 % Legacy Sovereign Fund: Our legacy to future generations. Setting up a Legacy Sovereign Fund that will invest for future generations 1% of total government revenue collection credited to the Fund each year ALL proceeds from the sales of government properties credited to the Legacy Sovereign Fund for long term investment Legacy Sovereign Fund answerable to Parliament e-Budget Brief 2015 / 2016 12 MACROECONOMIC POLICIES AND TAXATION Prospects for 2015/16 Financial year 2015/2016 - recurrent expenditure Rs 93.6 billion, capital expenditure Rs 12.6 billion Total revenue - Rs 90.8 billion, of which tax receipts Rs 77.8 billion Budget deficit for 2015/2016 - 3.5% of GDP e-Budget Brief 2015 / 2016 13 CORPORATE TAX Banks Banks will continue to pay the special levy at the current rate of 3.4% on book profit and 1% on operating income of Segment B activities and 10% on chargeable income on Segment A activities until 30 June 2018. Telephone service providers levy The solidarity levy at the rate of 5% on book profit and 1.5% on gross receipts will be maintained up to 30 June 2018. Alternative Minimum Tax The provisions regarding Alternative Minimum Tax (AMT) will be removed. Small enterprises with turnover less than Rs.10 million SMEs registering with the new SMEDA as from 1 June 2015 will be entitled to the following fiscal benefits: Corporate income tax holiday for the first 8 years No tax to be withheld under Tax Deduction at Source (TDS) Exemption from filling of the financial statements and annual returns with the Registrar of Companies for the first 8 years No Advance Payment System (APS) returns to be submitted Advance Payment System A company will no longer be required to submit an APS return where its gross income is less than Rs.10 million or it did not have a chargeable income during the preceding accounting year. Bio farming Exemption from corporate tax for the first 8 years for a company holding a Bio Farming Development Certificate. Accelerated annual allowance Accelerated annual allowance, introduced in 2013, in respect of landscaping and other earth works for embellishment purposes (50% straight line) and green technology equipment (50% straight line) could be claimed only during the income years ended 31 December 2013 and 2014. These provisions will henceforth apply permanently. e-Budget Brief 2015 / 2016 14 Additionally, the accelerated annual allowances have been extended until 30 June 2018 for capital expenditure on: Plant or machinery costing up to Rs.50,000 Industrial premises dedicated to manufacturing Electronic and high-precision machinery (including computer hardware and software) Plant and machinery (excluding passenger car) by a manufacturing company Scientific research Corporate Social Responsibility The CSR Fund can now be used towards the “parrainage” of pockets of poverty already identified by the Government. Under this system, companies will take the responsibility for the short to long-term development of the 38 identified regions where poverty is prevalent. All CSR guidelines are now being removed to allow companies to decide on the best way to allocate their fund in line with their objectives. Exemption Non-resident companies will be exempted from corporate tax on interest received from debentures quoted on the Stock Exchange. Tax return Companies having a 30 June year end will have the option of either filing their annual tax return and pay tax by 31 December or pay tax for the last quarter by filing an additional APS return and settle any balance of tax and file their annual return by 31 January of the following year. Companies having a 31 December year end will have to file their annual income tax return and pay tax at least 2 working days before 30 June. e-Budget Brief 2015 / 2016 15 PERSONAL TAX Income Exemption Thresholds The following increase will reduce income tax payable by Rs.1,500: From To Individual without any dependent Rs.275,000 Rs.285,000 Individual with 1 dependent Rs.385,000 Rs.395,000 Individual with 2 dependents Rs.445,000 Rs.455,000 Individual with 3 or more dependents Rs.485,000 Rs.495,000 Retired person without any dependent Rs.325,000 Rs.335,000 Retired person with 1 or more dependents Rs.435,000 Rs.445,000 Tertiary education exemption A taxpayer having a dependent child pursuing a non-sponsored full-time undergraduate course at a recognised tertiary educational institution is entitled to claim an additional income exemption of Rs.135,000 in respect of studies carried out either in Mauritius or abroad, instead of Rs.125,000 abroad and Rs.80,000 in Mauritius. The claim for exemption can now be made for a period of 6 years instead of 3. Interest relief As from 1 July 2015, a first time home owner can claim the interest paid on a secured housing loan against his taxable income over the term of the loan. The 5 year time limit claim and restriction of Rs.120,000 for interest relief are being abolished. Lump sum income As from 1 July 2015, a taxpayer receiving a lump sum as commutation of pension, retiring allowance or severance allowance will be exempted from income tax on an amount not exceeding Rs.2 million instead of Rs.1.5 million. Donation of Basic Retirement Pension (BRP) Basic retirement pension donated in full to an approved charitable institution or an approved Foundation will be exempted from income tax. e-Budget Brief 2015 / 2016 16 Submission of income tax returns With the change of the financial year by the Government from December to June, individuals will henceforth be required to submit their income tax returns on 30 September or 15 October for those doing so electronically. Hence for 2015, individuals will have to submit a second income tax return covering the period from 1 January to 30 June 2015. Income Exemption Thresholds The applicable exemption thresholds and other deductions/reliefs allowable for the 6 months period from 1 January to 30 June 2015 are set out below: (1) Income exemption threshold Amount Individual without any dependent Rs.142,500 Individual with 1 dependent Rs.197,500 Individual with 2 dependents Rs.227,500 Individual with 3 or more dependents Rs.247,500 Retired person without any dependent Rs.167,500 Retired person with 1 or more dependents Rs.222,500 (2) Additional exemption for dependent child pursing undergraduate course. The allowable deduction is halved to Rs.67,500 for the 6 months period. It will not impact on the 6 year time limit. (3) Medical or health insurance premium relief. The allowable deduction is halved to Rs.6,000 and Rs.3,000 respectively. (4) Interest relief on secured housing loan. The allowable deduction is the actual amount of interest paid during the 6 months period. Statement of Emoluments and Tax deduction Employers will have to issue to their employees the Statement of Emoluments and Tax Deduction by 15 August 2015 for the 6 months period. e-Budget Brief 2015 / 2016 17 Allowable deductions The cost of acquisition of solar energy equipment including photovoltaic kits and battery for storage of electricity by household owners is deductible from his chargeable income. Diaspora Incentives to encourage the Mauritian diaspora abroad to return to Mauritius are as follows: Exemption from income tax on all their income for a period of 10 years. Exemption of customs duties of up to a maximum of Rs.2 million on a car purchased in Mauritius or abroad. No customs duties and VAT on the repatriation of their personal belongings VALUE ADDED TAX Registration The threshold for compulsory registration will increase from Rs.4 million to Rs.6 million of annual turnover of taxable supplies. Importers of second hand motor cars will be compulsorily required to be VAT registered. Small businesses Small businesses will account for VAT on a cash basis to align with the simplified income tax system. Exemption VAT is removed on machinery and equipment used in the exploration and production of petroleum products. Zero-rated supplies Chilled deep sea-water to be used for the provision of air conditioning. Exempt person A company engaged in the provision of health services is exempted from the payment of VAT on the construction of a purpose-built building for the provision of health services. The same exemption will apply on the construction of a nursing home or a residential care home. Price inclusive The law will be amended for mandatory display or advertisement of all prices to be inclusive of VAT to avoid any ambiguity. e-Budget Brief 2015 / 2016 18 VAT repayment VAT up to an amount of Rs.300,000 will be refunded to individuals constructing their houses before 30 June 2018 at a cost not exceeding Rs.2.5 million by a VAT registered building contractor. The refund also applies on the purchase of an apartment before 30 June 2018 from a property developer. The monthly income of the household must not exceed Rs.50,000. Levy on SMS and MMS The levy of 10 cents per message on SMS or MMS will be abolished as from 1 July 2015. CUSTOMS DUTY Iron bars The rate of customs duty will be reduced from 15% to 10% as from 1 July 2015. Exemption Imports of bio food inputs EXCISE DUTY Motor vehicles The concessionary rate currently given to the parent of a disabled minor will be extended to the parent of any disabled person with impaired mobility. Levy on petroleum products The MID levy of 30 cents per litre of petroleum products will be removed on those that are re-exported as from 1 July 2015. CO2 Levy/Rebate on Motor Cars The fixing of the threshold for determining the levy or rebate will be reviewed. e-Budget Brief 2015 / 2016 19 REGISTRATION DUTY The first time buyer of residential bare land will be exempted from the payment of registration duty where the value of the land does not exceed Rs.1.5 million. Extension of the exemption for the purchase of land for implementing a Construction of Housing Estate Scheme registered before 30 June 2018 where a unit costing less than Rs.4 million in a housing estate of at least 5 units. LAND TRANSFER TAX Exemption for the sale of a unit costing less than Rs.4 million in a housing estate of at least 5 units under a scheme registered before 30 June 2018. The exemption also applies on the purchase of the land for implementing the scheme. LAND CONVERSION TAX A project promoter and investor who is the holder of a long-term lease over agricultural land which is used for renewable energy projects such as solar farms, agri-solar farms and biomass projects will be exempted from the payment of the land conversion tax when he applies for a land conversion permit. e-Budget Brief 2015 / 2016 20 BETTING TAX The betting tax and licences will be simplified and streamlined as follows: Actvities Annual Licence Fee From To Betting Tax From To CATEGORY 1: CASINO Rs 3.5 million + Casino Rs 125,000 per gaming machine CATEGORY 2: GAMING HOUSE “A” Rs 3.5 million Gaming House “A” in + Mauritius Rs 125,000 per gaming machine Rs 500,000 Gaming House “A” in + Rodrigues Rs 20,000 per machine CATEGORY 3: HORSE-RACING Bookmaker conducting fixed odds betting on local race: (a) at the racecourse (b) outside the racecourse e-Budget Brief 2015 / 2016 Rs 350,000 Rs 350,000 Rs 3.5 million + Rs 125,000 per gaming machine 15% of gross takings 15% of gross takings 35% of gross takings (gaming machine) 35% of gross takings (gaming machine) Rs 3.5 million + Rs 125,000 per gaming machine Rs 1 million + Rs.50,000 per machine 15% of gross takings 30% of gross takings 35% of gross takings (gaming machine) 15% of gross takings 35% of gross takings (gaming machine) 30% of gross takings 35% of gross takings (gaming machine) 35% of gross takings (gaming machine) 10% of gross stakes + Fixed duty of Rs 16,000/24,000 per race meeting 10% of gross stakes + Fixed duty of Rs 16,000 per race meeting 10 % of gross stakes Rs 1 million Rs 3.5 million (Fixed duty abolished) 20% of gross stakes (Fixed duty abolished) 21 CATEGORY 3: HORSE-RACING (cont‟d) Rs 350,000 per principal place of business (c) through remote communication Totalisator Operator: (a) at the racecourse (b) outside the racecourse (c) conducting bets through remote communication + Rs 40,000 per additional place of business/facility Rs 100,000 Rs 10,000 at each place of business Rs 40,000 in respect of the principal place of business + Rs 10,000 in respect of each place at which facilities are provided (d) conducting local race inter-totalisator Rs 350,000 betting (e) conducting foreign race inter-totalisator Rs 350,000 betting (f) per terminal Rs 10,000 Horse-racing organiser Rs 1 million CATEGORY 4: ON ANY EVENT (INCLUDING FOOTBALL) Rs 350,000 per principal place of business Bookmaker conducting fixed odds betting on any event or + contingency Rs 20,000 in respect of additional place of business e-Budget Brief 2015 / 2016 Rs 3.5 million per principal place of business + Rs 40,000 per additional place of business/facility Rs 1 million Rs 40,000 at each place of business Rs 40,000 in respect of the principal place of business + Rs 40,000 in respect of each place at which facilities are provided 10% of gross stakes + Fixed duty of Rs 24,000 per race meeting 20% of gross stakes (Fixed duty abolished) Win and place 10 % Other 12% 20 % of gross stakes N/A N/A Rs.3.5 million Rs.3.5 million Rs 40,000 Rs 1 million Rs 3.5 million per principal place of business + Rs 40,000 in respect of additional place of business 10% of gross stakes + Fixed duty of Rs 24,000 per week per place of business 20 % of gross stakes (Fixed duty abolished) 22 CATEGORY 5: MAURITIUS NATIONAL LOTTERY Operator of Mauritius Rs 500,000 National Lottery CATEGORY 6: MISCELLANEOUS Sweepstake organiser Rs 37,500 Local pool promoter Rs 15,000 Agent of a foreign pool Rs 37,500 promoter Lottery under Part XVII of the Higher of the Rs 5,000 or 35% Gambling Regulatory of the total market value of Authority Act prizes Operator of dart games Rs 30,000 per dart board Ad hoc licence Rs 20,000 per day Gaming House “B” Limited Payout Machine Rs 50,000 Rs 10,000 for operator + Rs 5,000 per machine Collector Rs 190 Rs 5 million Rs 15,000 Rs 15,000 Rs 15,000 46.16 % on Net Proceeds 10% of gross stakes 12% of gross proceeds 12% of gross stakes 46.16 % on Net Proceeds 10% of gross stakes 12% of gross proceeds 12% of gross stakes Rs 15,000 N/A N/A Rs 15,000 Rs 15,000 per day Rs 15,000 Rs 15,000 for operator + Rs 10,000 per machine Rs 190 N/A N/A N/A N/A N/A Higher of Rs 500,000 or 10% of gross takings per machine payable on a monthly basis N/A Higher of Rs 500,000 or 10% of gross takings per machine payable on a monthly basis N/A ADVERTISING STRUCTURE FEE The owner of an advertising structure who fails to register with the MRA will be liable to a penalty of 50% of the fee payable. e-Budget Brief 2015 / 2016 N/A 23 TAX ADMINISTRATION Tax Administration: General The MRA will have 3 years to raise an assessment instead of the current 4 years. The statutory payment of 30% requested whilst making an objection against a tax assessment has been reduced to 10% of the amount of the tax assessed. The Expeditious Dispute Resolution of Tax Scheme (EDRTS) has been reintroduced for a period of one year. This scheme will allow the MRA to review assessments raised on a taxpayer who could not lodge an objection because of their inability to pay 30% of the amount assessed. Interest rate for late payment of tax to the MRA has been halved to 0.5% per month hence 6% for a year. The maximum penalty for late submission/non-submission of tax returns by SMEs has been reduced to Rs.5,000 from Rs.20,000. Furthermore, the penalty for late payment of tax has been reduced from 5% to 2%. The Board of the MRA will now be involved in the process and other matters relating to the application or execution of the revenue laws in line with the policy decision of the Government. Arrears Payment Scheme Under the arrears payment scheme, no penalty will be charged where any arrears due to the Registrar as at 23 March 2015 is settled before 31 January 2016. Both the MRA and the Registrar General will be required to issue a written notice specifying the amount of duty or tax payable within 5 working days, following either an agreement or a decision reached before the ARC. The MRA and Registrar General should give written notice to a debtor within 5 working days when a privilege is being inscribed on his property or when such inscription is subsequently erased. Tax Administration – Income Tax A company whose annual turnover does not exceed Rs.6 million will not be required to operate the Tax Deduction at Source (TDS) A company whose annual turnover exceeds Rs.100 million will be required to submit an annual electronic statement showing details of payment purchase of goods and services in excess of Rs. 100,000 per annum, including details of the recipients. e-Budget Brief 2015 / 2016 24 Tax Administration – VAT Ministries, Government departments, local authorities, statutory bodies and the Rodrigues Regional Assembly will remit directly to the MRA a percentage of VAT to be paid on contracts exceeding Rs.300,000. Consequently the VAT registered contractor will make the necessary adjustments in his VAT return. The time limit of 45 days for the repayment of excess VAT by the MRA will only start as from the date the relevant receipts are received by the MRA. In addition, VAT recovery through attachment orders and inscribed privilege or any such instruments will be limited to the VAT amount unpaid. Tax Administration – Excise Duty The Excise Act will be amended to define “cordial” as having a content of at least 90 grams of sugar per litre. The evaporation rate allowable by MRA will henceforth be 2% to provide for more sophisticated methods of ageing for the production of premium quality rum. Furthermore, in order to align with international standards, the maximum alcoholic strength of aged rum will be 55 degrees instead of 50 degrees. Amendment will be bought to the Excise Act to enable the utilisation of residual of alcohol locally as bio-fuel in adapted boilers and remove a barrier to export. Security in the form of bonds will replace bank guarantees for the purposes of ensuring payment of excise duty on excisable goods manufactured in Mauritius. Tax Administration – Customs Duties Amendment will be made to Customs Act to cater for: The introduction of 5% penalty for late payment of customs duty and excise duty. Right to appeal to the ARC from an aggrieved person who make an objection after the prescribed limit. A de mininis clause where no claim for refund will be entertained where the refund of custom duty and exercise duty is less than Rs.250 The clarification that abandoned goods that have gone through the process of auction and which have not fetched a sufficient price to cover the duties and taxes may be destroyed or donated to a charitable institution approved by MRA or to a government agency. The Director General to scan a passenger travel documents to enable timely completion of customs facilities. The deferred payment of duties and taxes at import by one month except for the month of June for SMEs registered with SMEDA and other VAT registered persons compliant with revenue laws. A provision to prescribe the functions and duties of a freight forwarder, a customs broker and a customs agent. e-Budget Brief 2015 / 2016 25 Tax Administration – Registrar-General The legislation at the level of the Registrar-General will be amended to cater for: Online submission of documents E-registration and e-payment The time limit for the determination of an objection will be 6 months where an objection was made before 30 June 2015 and 4 months for an objection made after 1 July 2015. In case the objection is not dealt within the prescribed period, the objection will deem to have been allowed by the Registrar-General. Irrespective of whether one party has objected or not to an assessment made by the Registrar-General, any reduction in value of an immovable property agreed or determined at the Assessment Review Committee will apply to both buyer and seller. Advance ruling will also be introduced at the Registrar-General Department. Registration duty exemption also applies to the right of occupation “droit d‟occupation” in respect of any immovable property from an ascendant to descendant. Should you require any additional information, explanation or clarification regarding Budget 2014, please do not hesitate to contact us. BDO & Co. Chartered Accountants Monday 23rd March 2015 This Budget Brief was prepared after the Minister of Finance delivered his Budget Speech. The Budget proposals are subject to amendment during the parliamentary debates on their adoption. This publication is for guidance only and professional advice should be sought before acting on any information contained herein. No responsibility can be accepted by BDO & Co. for loss occasioned to any person as a result of action taken or refrained from in consequence of the contents of this publication. e-Budget Brief 2015 / 2016 26 DISCLAIMER BDO & Co., a firm of Chartered Accountants in Mauritius, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms. This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact BDO & Co. to discuss these matters in the context of your particular circumstances. BDO & Co., its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it. BDO & Co. Chartered Accountants 10, Frère Félix de Valois street, Port Louis MAURITIUS Tel: +230 202 3000 e-mail: [email protected] www.bdo.mu e-Budget Brief 2015 / 2016
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