JUNE 2020 – MAURITIUS
BUDGET SPEECH 2020/2021 & TAX CHANGES
It is important that employers note the following:
Mauritius Budget Speech Highlights
The 2020/2021 Budget Statement was delivered by the Minister of Finance, Economic Planning and Development, Dr the Hon Renganaden Padayachy on Thursday 4 June 2020.
Economic Highlights:
- As a result of the Coronavirus pandemic, the government’s debt is expected to jump significantly from a forecast of 61.6% to 83.4% of GDP.
- In addition, the following is expected:
- An economic recession of -5.8% of GDP;
- Unemployment at 17%, an increase of 153.7%.
- The budget deficit, which has evolved in a stable range of 3 to 3.5% of GDP since 2013, is estimated to explode to 13.6% in 2020, largely due to the COVID-19 crisis.
- In regard to the outlook for 2020-2021, total revenue will amount to Rs 162.9 billion and total expenditure will amount to Rs 162.9 billion.
- The Development Bank of Mauritius will invest Rs 10 billion in the SME (small medium enterprise) sector and cooperative societies, with a maximum of Rs 10 million per enterprise to sustain small and medium firms at a concessional rate of 0.5% per annum.
- Rs 20 billion will be injected to support small and medium-sized enterprises and vulnerable households.
- Government has earmarked Rs 15 billion to provide an exceptional minimum monthly support of Rs 5,100 to each beneficiary faced with unemployment.
- The Private Pensions Scheme Act will be amended to:
- Allow for a member of a private pension scheme to transfer the amount of accrued benefits to another private pension scheme; and
- Establish a procedure for unclaimed funds under a private pension scheme to be transferred to a special fund to be set up by the Financial Services Commission.Tax measures:
- As from 1 July 2020, the solidarity levy rate for Mauritian citizens will increase from 5% to 25% on their annual chargeable income, plus dividends, in excess of Rs 3 million instead of Rs 3.5 million. The levy will be payable under the PAYE system.
- As from 1 September 2020, the National Pension Fund will be abolished and replaced by a new system, the Contribution Sociale Généralisée (CSG), a progressive contribution system ranging from:
- 1.5% on a monthly salary of up to Rs 50,000;
- 3% on a monthly salary over Rs 50,000.
- An income tax holiday of eight years will be granted to a company manufacturing:
- Nutraceutical products with operations starting on or after 4 June 2020; and
- Pharmaceutical products, medical devices or high-tech products with operations starting on or after 8 June 2017.
- The end-of-year bonus to employees earning up to Rs 100,000 monthly is secured under the Worker’s Rights Act.
- No changes to personal income tax rates were announced.
- Income exemption thresholds:
- As from 1 July 2020, the income exemption thresholds will be increased by amounts ranging from Rs 15,000 to Rs 80,000.
A taxpayer who has a bedridden next of kin as a dependent will be allowed to claim an additional annual deduction in the range of Rs 80,000 to Rs 110,000, provided that the total number of dependents does not exceed four.
Contact our legislation team at info@crs.co.za if you require any additional information.
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