Take a tax holiday in Mauritius

A small country with a big reputation, Mauritius already had an excellent name as a place to set up an offshore business. With a government intent on making it a ‘cyber island’ – a leading information technology free-trade zone – and already boasting one of the lowest tax platforms in the world, the recently unveiled new budget, with lengthy tax breaks available for a multitude of platforms, can only make it more inviting. We’re taking the time to highlight some of the budgets more relevant changes.

Incentivising research and development, the budget allows newly set up companies associated with innovation-driven activities a tax holiday for eight years on any income obtained from its intellectual property assets. This tax holiday is also open to existing companies for intellectual property developed locally after June 10th, 2019.

Companies setting up e-commerce platforms in Mauritius before June 30th 2025 will, according to the budget, be eligible for a five-year tax holiday.

The same period of five years applies for peer-to-peer lending operators for companies starting operations before December 31st 2020.

Four-year tax holidays have also been granted for acquired income through bunkering of low Sulphur Heavy Fuel Oil.

Outside of tax holidays the budget proposed several measures to attract the development of numerous international financial services. The proposals for new rules and a new tax regime promoting the development of the Real Estate Investment Trusts (REITs), an “umbrella licence” for wealth management activities and a scheme for the headquartering of e-commerce activities.

The budget has also incentivised banks with a reduced tax rate if the bank engages at least five percent of its new banking facilities to the following categories of business: SME’s in Mauritius, manufacturing, agriculture, production of renewable energy or operators in African or Asian countries.

Measures were also set out in the budget for attracting financial technology, with the goal of becoming the regions hub for Fintech. The Financial Services Commission announced it will:

• Establish a regime for Robotics and AI enabled financial advisory services.
• Introduce a new licence for Fintech Service providers.
• Encourage self-regulation for Fintech activities in consultation with the United Nation Office on Drugs and Crime.
• Introduce the use of e-signatures and e-licences on a pilot basis.
• Create crowd funding as a new licensable activity.

Changes to international tax laws saw amendments to the Income Tax Act, which now determines that companies centrally managed and controlled outside of Mauritius will not be considered a tax resident in Mauritius. This amendment was implemented on the recommendation of industry stakeholders.

In line with worldwide efforts to reduce the effects of climate change, the budget also contains tax breaks for electric vehicles, including a double deduction for businesses investing in a fleet of eco friendly vehicles.

Finally, if you’re planning more than just a tax holiday, the budget introduces a VAT refund scheme on accommodation costs for events of at least 100 visitors over three nights in a hotel in Mauritius. The event would need to be hosted by an event organiser registered with the Economic Development Board and the application should be made within sixty days and be accompanied by VAT invoices.