VAT & Other Taxes
VAT exemption applicable to specific construction
- The construction of marinas will be exempted from VAT as part of the Government’s plan to incentivise the development of the ocean economy.
- Provisions of the VAT Act are being clarified as follows:
- Where a local company supplies services to a foreign company (based outside of Mauritius), these services will be zero-rated provided that the foreign company does not supply these same services back to another local company
- Where there is splitting of a business entity into different entities to avoid VAT registration, each entity will be compulsorily required to register for VAT
- The management of insurance schemes is exempt from VAT.
- Where a VAT invoice is issued to a non VAT-registered person in business, his name, business address and BRN will have to be stated on the invoice
- Currently, a VAT-registered person may claim input VAT on capital goods such as plant, building, machinery and equipment. Provision is being made to extend this to include input VAT on goodwill on acquisition of a business and on the acquisition of intangible assets (i.e. software, patents or franchise agreements)
- All VAT returns to be filed and VAT liabilities to be paid electronically as from 1 March 2020.
VAT Refund Schemes
- Accommodation costs
Accommodation costs for events such as business meetings, conferences and weddings with at least 100 foreign attendees staying for a minimum of three nights will be eligible for VAT refund.
- Residential Building and Apartment
The eligibility for the VAT Refund Scheme has extended:
The upper limit for the cost of construction of a residence or purchase of an apartment from MUR4 Million to MUR5 Million
The household income threshold from MUR2 Million to MUR3.5 Million
The duration of scheme from 30 June 2020 to 30 June 2025.
Removal of VAT on goods and services
- VAT will be removed on the following goods and services:
- Vermicelli and appalam;
- Toukmaria, linseed, sagoo, mustard and sesame seeds;
- Cooking gas in cylinders of up to 12 kg for domestic use by households;
- Specialised compression garments used for medical purposes; and
- Transport fares of passengers by light rail.
- The VAT Act provides that payment of subscription fees to trade unions, statutory bodies and associations under the Registration of Association Act is exempt. This has been extended to cover payment of subscription fees to prescribed professional bodies
- Airlines will be exempted from payment of VAT on printed materials bearing their insignia, publicity materials and uniforms
- The VAT Act currently classifies bread as an exempt supply. Bread has been classified as a zero-rated good with retrospective effect as from 1 March 2019.
- Excise duty on mogas will be reduced from MUR14.80 to MUR12.20 per litre and on gasoil from MUR7.30 to MUR4.70 per litre
- Removal of 50% duty on non-fossil outboard motors to encourage the use of environmentally friendly outboard motors in our lagoons
- The rate of excise duty on electric and plug-in Hybrid cars is being lowered depending on the type of motor car.
- The VAT Act is being amended to close existing loopholes regarding zero-rating of exports of services
- Businesses deliberately splitting their activities to remain below the compulsory VAT registration thresholds will have to reassess their structure. It is not clear as to which basis (e.g. ownership, common control) will be used to determine if business units are connected.
The above information has been extracted from the budget speech delivered by The Honourable Pravind Kumar Jugnauth, Prime Minister, Minister of Home Affairs, External Communications and National Development Unit and Minister of Finance and Economic Development, to the National Assembly, on 10 June 2019.
The Budget proposals may be amended significantly before enactment. The content of this summary is intended to provide a general guide to the subject matter and should not be regarded as a basis for ascertaining liability to tax or determining investment strategy in specific circumstances. In such cases specialist advice should be taken.