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Mauritius Budget Highlights 2012
The Minister of Finance and Economic Development, presented an innovative budget package to ally growth and social engagements only few months after coming to office post the reshuffling of the cabinet. Despite the continuing challenges of a double dip recession looming with a fragile global economy fraught with uncertainty, the Minister's theme for the 2012 budget is "growth for the greater good". Taxand Mauritius summarises the key tax topics covered by the budget and how this will allow multinationals to establish growth.
The four objectives set were (i) setting the basis for strong growth, (ii) riding out the crisis, (iii) improving our social protection and (iv) fiscal reform.
To stimulate investment and growth, the Minister announced a number of tax measures:
- with immediate effect the abolishing of capital gains tax on immoveable property
- the abolishing of the solidarity levy on dividends and interests derived by individuals earning more than Rs 2 million annually
- tax holiday on Freeport operators, which was expected to end in 2013, will now be carried forward indefinitely
The last measure gives an opportunity for operators to use the Freeport platform as a regional hub and provide certainty on their tax obligations. The Minister also empowered the Board of Investment to actively promote the financial sector, ICT/BPO and the education and medical hubs.
Further, in order to expand its double taxation avoidance agreements and investment promotion and protection agreements, the government has decided to appoint two roving ambassadors for Africa and Indian Ocean. The minister also announced that he wants to expand the scope for investment domestically. The government will, therefore, disinvest from some of its commercial and industrial assets in order to raise revenue to invest in strategic sectors, offer better facilities to the public and generate wealth and employment.
The budget speech has demonstrated that with a fine balancing act, the Minister has managed to bring measures to generate a reasonable growth of 4% for 2012, whilst at the same time, keeping the budget deficit to a respectable amount of 3.8% of gross domestic product (GDP). The public sector is expected to be reduced to GDP ratio to 54.1% in 2012 compared to 62% this year. The tax rates applicable to both individuals and corporate as well as the value added tax remain unchanged at 15%. A measure that may not be popular among the global business management companies is the introduction of a 10% solidarity levy on their chargeable profits for 2012 and 2013.
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