No longer just a tourist destination, this little island is flourishing.
Through its 2017/18 Budget Speech, Mauritius has emphasised its commitment towards invigorating corporate growth, expanding social programmes, and stimulating the development of small businesses. With a projected growth rate of 4.1% expected during the next financial year, the Mauritian economy is thriving, and the budget seeks to ensure that this growth is not only achieved, but sustained. Backed by an era of political stability, Mauritius is definitively on track to meet its forecasted objectives. Shailen Ramgolam, our Senior Manager: Operations and Compliance, shared his views on how this newly revealed budget will affect our clientele and Mauritius at large.
A Budget with Big Goals
The 2017/18 Budget Speech builds on the previous year’s successes, and works towards attaining five definitive goals. These objectives can be broadly described as:
- Stimulating economic growth and enabling the creation of jobs;
- Uplifting existing infrastructure;
- Enhancing the quality of life for all people within the Republic;
- Ushering in a new social paradigm and,
- Consolidating, or strengthening, the macro-economic conditions within Mauritius.
These objectives may seem relatively unattainable, but building on the booming Mauritian economy, and the significant tax amendments set out in the Budget Speech, they may well be attained sooner than other regions or countries would be able to. Shailen explains:
“The budget responds to these inter-related challenges. The only challenge here is to ensure that the recommendations are realised within the proposed time frame. That, of course, often depends on how the revenue required can be collected and distributed. I do have full confidence that we will be able to, and work towards reaching that 4.1% GDP growth. There are certain things that will create a big impact, including the introduction of the Metro Express in Mauritius, and the large-scale investment in water infrastructure. There’s also a massive recruitment drive outlined, that seeks to employ more people in the police force, in health services and other social support programmes. In terms of business, local businesspeople looking towards exporting their products will now enjoy a high level of incentives that the government has provided. The reduction in Corporate tax rate to 3% on export goods is very exciting for big players in Mauritius, and SMEs. There is, however, little clarity for SMEs just yet, in terms of what financial support or subsidies the government will provide. For international companies and to encourage investors, the e-platform opens Africa up as a gateway for Mauritius. Working with our embassies, the government is not only promoting Mauritius as a tourist destination, but also working to attract investors through the Economic Development Board and the creation of Special Economic Zones. The first one has already been opened in Senegal.”
Income Tax Amendments
The 2017/18 Budget Speech outlined some significant income tax amendments, which include a Solidarity Levy. This levy seeks to further reduce inequalities, whereby high net worth individuals, who have chargeable income and dividends, of more than Rs 3.5million, will be required to pay 5 percent of the excess over to the government. While some may view this as a type of wealth tax, Shailen explains it as not too much of a concern for overseas investors because:
“Overseas investors need not worry as dividends are not taxable for them in Mauritius. We will await the Finance Bill to see whether overseas investors remain exempted in the future. The implementation of this Solidarity Levy will mainly affect local businesspeople, investors and high-income earners in Mauritius. The Mauritian Stock Exchange may also be affected, as this levy could be viewed as double taxation, due to the inclusion of dividends.”
Tax Residency Amendments
People who reap the benefits of a tax residency in Mauritius will breathe a sigh of satisfied relief, as the criteria attached to their residency have been reduced, with the number of days needed to determine tax residency decreased from 270 to 225, for the financial year ending 30 June 2016 and 2017. Shailen believes that many of our clientele will be pleased with this announcement as:
“This is a gateway to accommodate more flexibility for global companies. It creates more opportunities for people to come to Mauritius for business.”
Supporting Technology and Innovation
Significant incentives, including lengthy tax holidays for certain types of companies, have been created to support innovation and the creation, or implementation of, technology throughout Mauritius. Shailen explains:
“The Mauritian government recognises the importance of technology and our ability to keep pace is vital for growth and development, especially from a global perspective.”
Open for Business
With the 2017/18 Budget outlining key objectives for the new financial year, and relatively robust plans for achieving, Shailen reminds us that:
“Mauritius is here to welcome people, for us to grow together and create useful synergies.”
*About Shailen Ramgolam:
Shailen Ramgolam is a Member of the ACCA, and holds 3rd level certificates from the London Chambers of Commerce and Industry, in Public Relations, Selling, and Sales Management. Shailen’s career history includes thirteen years of professional experience, specialising in the global business sector, where he has been involved in group structuring, pre-incorporation tax advice, company set up, general administration, fund administration, secretarial and accounting services, and stepped in as director on several boards for global companies. Shailen also spent six years in the UK, where he worked for small & medium-sized accounting firms. He is currently the Senior Manager: Operations and Compliance, at Osiris Corporate Solutions (Mauritius) Ltd, where he supervises the compliance framework and operational strategic developments. Prior to this, Shailen was a Manager in the Corporate Services Team of Cim Global Business, leading a team of ten professionals and handling a wide portfolio of clients, including large multi-national companies and high net worth individuals.