BUDGET HIGHLIGHTS FOR 2010

The 2010 Budget addresses the three main priorities of the Government: (i) shaping the recovery following the global economic recession, (ii) consolidating social progress and (iii) sustaining Green Mauritius.

Mauritius has managed to come out relatively unscathed from the global recession as the economy has been resilient through some bold economic measures and reforms undertaken by the government. The fiscal deficit has been contained to 4.5% of GDP for the period July-Dec 2009 and the public sector debt is expected to be contained at less than 60% of GDP by the end of 2010.  The Balance of Payments is expected to exceed    Rs 13 billion in 2010. SMEs have also played a vital role and have created about 24,000 new jobs in the past four years.

The country has achieved a reasonable growth rate of 2.3% in 2009 and expects around 4% in 2010. FDI investment has been more than Rs 6 billion in just 9 months with a projection of around Rs 9 billion for the year.

The future seems to be very optimistic as hopefully the worst part of the global recession is behind us. Some of the bold measures taken to shape the economic recovery is the extension till December 2010 of the Additional Stimulus Package to give direct support to SMEs and large enterprises facing temporary difficulties due to the global recession.

Various tax suspensions to the tourism, construction and real estate sectors will be maintained until December 2010 to stimulate growth and protect jobs. Substantial funds will also be allocated to build, modernise and expand public infrastructure like the airport, roads and hospitals. A raft of measures to shore up the SME Sector e.g cost sharing for participation in trade fairs through SEHDA, factoring scheme, ‘Work from Home’ Scheme, setting up of Industrial Areas where SMEs can lease the land to construct their industrial buildings.

On a social front, much emphasis has been placed on eradication of poverty and assistance to the elderly and people with special needs for a better quality of life.

The Government has taken a series of measures in the Budget  to sustain a ‘Green Mauritius’: improving energy efficiency, building energy efficient buildings, shifting to Solar Energy, embellishing our environment and improving water supply.

This budget continues and expands on our efforts to further ease the business environment with proposed measures. The announced budget measures also provide new opportunities for investment. The recovery may be much quicker if the world economy recovers sooner than later.

FISCAL MEASURES

Individuals

The fiscal year will be changed to a calendar year basis as from 2010 : individual taxpayers will be required to submit a tax return covering the six months ending 31 December 2009.  The filing of the tax return and the payment deadline will be 5 April 2010.

The annual income exemption has been increased as follows:

Companies

• Tax deducted at source (TDS) on royalties paid to non-residents is increased from 10% to 15%.
• Companies who used to file tax return on 31 December will now be required to file their annual tax and APS returns at least 2 working days before the end of the calendar year.
• Betting tax on foreign football matches has been increased from 2% to 8%.
• Under the Additional Stimulus Package, provision is made for the exemption of land transfer tax and registration duty on land required for construction projects exceeding Rs 50 million.  This measure will apply until 31 December 2010.
• Suspension of solidarity levy applicable to operators in the tourism sector has been extended to 31 December 2010.

Custom Duties

• Custom duty is no longer applicable on rice milk, oats milk and almond milk.
• Custom duty on fluorescent kit, LED fixtures including lighting lamps have been removed.
• Custom duty on television sets above 32 inches is reduced from 30% to 15% and for TVs of up to 32 inches, custom duty of 30% has been removed.

 Others

• Listed companies with minority foreign shareholding will be allowed to acquire immovable property, without prior approval.

 VAT 

• The VAT rate has remained unchanged at 15%.

 National Residence Property Tax (NRPT)

The income threshold for individuals liable to NRPT has been increased from Rs 385,000 to Rs 400,000.

OTHER MEASURES

 Employment and Social Measures 

• Maintain the Additional Stimulus Package till December 2010 with an objective to save jobs.
• Focus on very small and medium size enterprises (VSME), especially empowering women – Rs22 million  has been earmarked for a Women’s Empowerment Centre.
• Sustaining public infrastructure , improvement in education, health, the environment and sports.
• Promoting private sector investment.
• Prolonging the work and training programme for retrenched workers and the unemployed.
• Earmarking RS2.5 billion for improving school infrastructure.
• Introduction of new grant formula for private-aided school.
• Provision of Rs95 million for the creation of an Open University of Mauritius (OUM) for centralizing all open and distance learning.
• Provision of motorized wheelchairs to disabled students who have secured a university seat for use at the University of Mauritius and University of Technology of Mauritius.
• Increasing the income ceiling from Rs7,500 to Rs8,500 for SC/HSC Examination fees.
• Introduction of a special e-learning classroom in 12 secondary schools.
• Recruitment of some 900 police constables to improve security and reinforce law and order in the country.
• Maintaining various tax suspensions until December 2010 to the tourism, construction and real estate sectors to fuel growth and preserve jobs.
• Increasing public sector investment to Rs24 billion.
• Allocation of Rs3.5 billion towards modernization and expansion of the Mauritius Container Terminal Berth and deepening of the seabed.
• Investing on the modernization and expansion of the airport.
• Consolidating the food security and social housing funds programmes.
• Construction of a new recreational centre for elderly costing Rs120 million at Belle Mare.
• Construction of a new DR A G Jeetoo Hospital at a cost of Rs2 billion.
• Investment of Rs1,581 million on healthcare infrastructure and medical supplies.
• Promotion of Arts and Culture by supporting artists, development of music in the country and upgrading of Plaza to serve as an Opera House.
• Government will build on a diversified and strong platform to combat poverty, fight exclusion and secure social progress through an Empowerment Programme with an initial endowment of Rs5 billion, integrated Housing Programme and Eradication of Absolute Poverty Programme.

 SMEs and VSMEs 

• Re-engineer the operations of the SME Partnership Fund to provide financial support to new SMEs.
• Launching of the Mauritius Business Growth Scheme (MBGS) in collaboration with the World Bank to finance start-ups with greater focus on SMEs using technological innovation.
• Providing 100% finance for the leasing if equipment by non-vat registered SMEs (turnover below Rs3M)
• Setting up of a 100 arpent industrial areas, where SMEs can lease land for construction of industrial buildings.
• Extension of the lease of Equipment Modernisation Scheme (LEMS) to cover all productive equipment, including goods vehicle.
• Contribution of Rs20M by SRJ Fund towards the creation of a permanent exhibition space for SMEs.
• Setting up a factoring for SMEs to raise the required working capital.
• Increasing eligibility for financing by the DBM of SMEs with turnover up to Rs5 M and its existing clients with turnover up to Rs15 M.
• Increasing the ceiling on booster loans at the DBM from Rs100,000 to Rs150,000.
• Launching an SME portal under the Mauritius Business Growth Scheme to provide information to service providers.
• Brodening the scheme for assisting small hotels and restaurants with turnover of less than Rs10 million to hire consultancy services on renovation and energy efficiency.

Financial Services 

• Development of an innovative and competitive law on  Private Foundation and promoting Mauritius as a platform for wealth management.
• The Financial Services Commission (FSC) will seek recognition as an equivalent jurisdiction with other financial centres.
• A study is being undertaken on the appropriate fiscal regime to improve the competitiveness of Mauritius as a business centre for Funds.

Salary Compensation 

• Alignment of salary compensation to calendar fiscal year.
• Compensation award on 1 January 2010 as follows:

  Manufacturing 

• Expansion of Leasing Equipment Modernisation Scheme (LEMS) to include large enterprises in Export and Domestic Oriented Manufacturing with Rs500 million from SJR Fund set aside for this purpose.
• Developing an Export Credit Scheme which will be operational by 2010.
• Greater protection for companies from unfair practices with the introduction of the anti-dumping and countervailing duty legislation into the National Assembly.
• Granting Rs40 million to make the Competition Commission fully operative in 2010

 ICT 

• Reduction in internet prices through the delivery of the LION project by 2011.
• Introduction of e-government initiatives to provide government services electronically and allowing receipt/payment of fees through the use of a smart ID card.
• Provision of Rs10 million from the SJR Fund to finance ‘technopreneurs” and their mentors in the creation of technology products for the global market.
• Creation of an e-business platform hosted by the Board of Investment to act as a national repository of all business licenses.
• Implementation of an e-learning programme in 12 secondary schools on an interactive and available on demand basis.
• Setting up of a ‘Work from Home’ BPO scheme by the National Empowerment Foundation (NEF) and the Board of Investment (BOI).

 Sustaining Green Mauritius 

• Maurice Ile Durable (MID) fund will finance CEB over the next five years to meet the differential between its average cost and the price of electricity from landfill gas to energy project.
• Proposed announcement of new prices for sale of electricity by Small Independent Power Producers (SIPP) to the CEB.
• Planned replacement of 600 buses by more energy efficient buses over a period of three years.
• Subsidy of Rs32 million to CEB to provide each household with up to 6 bulbs at Rs30 each.
• Launching of Public Private Partnership project for composting of waste on an industrial scale.
• Provision of Euro 65 million by ‘Agence Française de Developpement’ (AFD) for extending the waste water network in the North.
• Provision of a solar water heater programme at a cost of Rs 5,000 per unit.
• Mobilisation of Rs240 million for the upliftment and embellishment of public recreational spaces.
• Extension of the public sewerage system to connect around 32,000 households at an estimated cost of Rs6.6 billion.