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.
- 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.
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