To narrow the gap: 5% tax on the rich and Rs 1 000 to the poor

Pravind Jugnauth is determined to narrow the gap between the rich and the poor. 150,000 families earning less than Rs 10 000 per month will receive a monthly financial support of Rs 1 000 as from January 2018. Whereas individuals having chargeable income plus dividends in excess of Rs 3.5 million will be required to pay 5 per cent of the excess.

The Prime minister and Minister of Finance has introduced the negative income tax system to provide financial support to some 150,000 employees in full time employment and earning emoluments less than Rs 10,000 per month. This measure will provide financial support of up to Rs 1,000 per month to low-income employees. This policy will take effect as from 1st January 2018 and will cost about Rs 1.3 billion. The support will be paid on a semi-annual basis. Thus, the first payment will be paid by the MRA for the 6 months from January to June 2018 by 30th August 2018.

The benefit will only be paid if:

• The employer and employee have made the required contributions to the National Pensions Fund and the National Savings Fund; and
• The total income including exempt income of a couple does not exceed Rs 30,000 in a month.

Pursuing Poverty Eradication

To combat poverty, the Prime minister and Minister of Finance has allocated Rs 1.8 billion from the Government of India’s financial support to the construction of social and low income housing units. In addition, Government is earmarking Rs 5 billion for the next three years to the housing sector from the Budget.

Provision is made for the relocation of squatters at La Ferme in the context of the rehabilitation of the reservoir as well as for the urgent relocation to Camp Ithier of  families of Quatre Soeurs affected by severe landslide.

Ensuring consumer well-being

Consumer well-being is another priority of Government as it is a central component of quality of life:

• Last year, we reduced the price of LPG (12 kg) from Rs 330 to Rs 270. This year, we are further improving the purchasing power of consumers. The retail price of flour will be reduced from Rs 5.85 to Rs 4.85 per half kilogram, that is, by 17 percent, as from tomorrow.
• Consequently, the price of bread and other flourbased products should also go down. The price of a 100 gram “pain maison” will go down by 10 cents per unit.

Sale by levy

To better protect the victims of sale by levy, Government will amend the legislation to ensure that the ‘mise à prix’ should be at least 50 per cent of the value of the immoveable property being put for sale.

Middle class

Pravind Jugnauth is aware that middle class families are facing difficulties to finance the construction or purchase of a house. Currently, commercial banks grant credit facilities up to 90 per cent of residential property for loans of less than Rs 5 million. “ During the pre-budget consultations, we have received proposals to remove the limit of 90 per cent, especially for first time buyers. We have discussed the matter with the Bank of Mauritius and they have agreed to consider favourably removing the limit”, he said.

Income Exemption Threshold

The Income Exemption Threshold has been increased. Individuals having more than one dependent are penalized with the current income exemption thresholds. I am reversing this situation. The income exemption thresholds are being increased as follows:

• Rs 5,000 for tax payers having no dependent or one dependent;
• Rs 10,000 for those having 2 dependents; and
• Rs 15,000 for those having 3 dependents.

Moreover, I am introducing a new category of income exemption threshold for persons having 4 or more dependents. They will be entitled to an increase of Rs 45,000 in their income exemption threshold bringing it to Rs 550,000.

Medical insurance premiums

The maximum allowable deduction for medical insurance premiums for income tax purposes has been raised, as follows:

(i) From Rs 12,000 to Rs 15,000 in respect of the tax payer;

(ii) From Rs 12,000 to Rs 15,000 in respect of the first dependent; and

(iii) From Rs 6,000 to Rs 10,000 for each of two additional dependents.

Deduction for household employees

A new deduction for taxpayers who employ household workers. A person will be allowed to deduct the wages paid to household employees from his annual taxable income subject to a maximum deduction of Rs 30,000.

Corporate Social Responsibility

The Minister of Finance aimed at simplifying the CSR and giving NGOs greater access to funding. Based on what was decided last year, companies are supposed to contribute 50 per cent of their CSR contributions to the MRA in the first year and 75 per cent in the second year. To give more time to the companies to adapt to the new system, companies are allowed to keep 50 per cent of their CSR contributions to implement their own CSR projects for another year. The other 50 per cent will have to be remitted to the MRA for the National CSR Foundation.

Fostering higher growth

In order to strengthen economic growth, various announcements have been made as follow:

• Setting up of an Economic Development Board (EDB) to ensure greater coherence and effectiveness in implementing our policies and actions 
• Setting up of a National Economic and Social Council to address key socioeconomic issues and strengthen dialogue with the private sector and civil society.

Consolidating diplomatic footprint in Africa 

This budget has put much emphasis on consolidating Mauritius presence in Africa. These measures will be taken up:  

• A series of joint commission will be held with countries such as Cote D’Ivoire, Ethiopia, Ghana, Kenya, Madagascar and Zambia so as enhance bilateral cooperation with these countries in various sectors, including trade, investment and capacity building
• The first Special Economic Zone in Senegal will be inaugurated in a month.  
• A business and Investment Platform for Africa (BIPA) will be set up to facilitate the implementation of joint projects by Mauritian enterprises in Africa

Innovation in Mauritius

The government has the vision to build an innovative Mauritius. The following measures has been announced: 

• Restructuring the Mauritius Research Council to transform it into the Mauritius Research and Innovation Council (MRIC)
• Setting up of a Mauritius Research Repository to which the public will have access
• A Bio-Technology Institute will be set up under the aegis of the Ministry of Agro Industry and Food Security
• Government is injecting Rs 50 million in a Research Fund to be managed by the Tertiary Education Commission (TEC)
• An Innovator Occupation Permit will be introduced for innovative start-ups with a minimum operational expenditure of 20 per cent for R&D purposes.
• Companies will be allowed to claim a double deduction in respect of qualifying expenditure on R&D. This will apply until income year 2021-2022.

Skills Development

In order to achieve higher growth and lower unemployment rate, the government will lay emphasis on adapting the skills of manpower in the following ways: 

• A sum of Rs 310 million will be spent for upgrading educational hardware and infrastructure in training institutions, namely, the MITD training centres, the École Hotelière Sir Gaetan Duval, the Sir Ramparsad Neerunjun Training Centre and Le Chou Training Centre in Rodrigues
• Refurbishing at the University of Technology Mauritius and the Université des Mascareignes
• A new campus for the University of Technology Mauritius
• An amount of Rs 130 allocated to polytechnic to better connect the world of learning with the world of work, especially in the fields of tourism, ICT, nursing and paramedics
• 2500 youth will be enrolled for training under the National Skills Development Programme

Business facilitation

The government is introducing the following measures to improve the doing business environment: 

• The cost of extension of high tension networks for commercial projects will be reduced by 50 %. 
• Elimination of the processing fee for new applications for CEB in respect of all categories of customers, including domestic customers, but excluding parceling of land and Property Development Schemes projects
• Plan approvals from CEB, CWA or the WMA will not be required anymore when applying for a Building and Land Use Permit in zones which are well networked and serviced, as well as in morcellements 
• To further attract foreign investment, high tech machines and equipment brought by an investor from abroad will now be considered as part of the minimum investment of USD 100,000 required to obtain an Occupation Permit  

Investment, growth and job creation

The government has come forward with the following measures to boost investment, growth and job creation in the main sectors of our economy, starting with manufacturing: 

• Introducing a major tax reform to encourage domestic enterprises to expand export capacity and seek new markets, especially the SMEs. The profits from exports of goods will be taxed at the lower rate of 3%, instead of 15%
• An 8-year income tax holiday for new companies engaged in the manufacturing of pharmaceutical products, medical devices and high tech products
• Speed to Market Scheme is being extended to the export of jewellery, medical devices, fruits, flowers, vegetables and chilled fish
• Introduction of the Innovation Box Regime for Intellectual Property assets. New companies involved in innovation-driven activities will benefit from a tax holiday of 8 years on the income derived from the totality of Intellectual Property Assets.
• Extending the 8-year work permit policy for expatriate workers in the export-oriented enterprises to all manufacturing activities 
• The issuance and renewal of work permits will be made within the reduced timeframe of 15 working days, instead of 40 working days
• The Fashion and Design Institute will be reengineered to focus on training in areas where skills mismatch in fashion and design are most severe and will include training in jewellery. 
• Setting up two 3D Printing Service Centres at the National Computer Board to support manufacturing firms, university students and start-ups
• Mauritas will be given full autonomy to offer accreditation services locally 
• Elimination of Registration Duty and Land Transfer Tax on any transfer of immovable property for the setting up of a business for high-tech manufacturing 

Diversification in non sugar sector 

In order to boost productivity and employment creation in non sugar agriculture, the government strategy will be as follows: 

• Encouraging Macadamia plantations in Mauritius as a new export niche and create new employment opportunities. Funds will provided for importation of Macadamia seeds, setting up of nursery facilities and for foreign consultancy to advise and assist FAREI in the propagation of Macadamia trees 
• Setting up of a Food Processing Development Certificate to promote the importation of products such as maize, vanilla, cocoa, coconut and medicinal plants to be used as raw materials for processing and re-exports, including the refining of raw sugar

Tea export

The government will be encouraging the revival of tea export by these measures:

• The final price for green tea leaves supplied to tea manufacturers will be increased by 6% for the current crop 2016/17
• Tea growers will be granted excise duty exemption on the purchase of a single/double space cabin vehicle 
• VAT refund for specified equipment and tools used in tea cultivation
• The setting up of greenhouses for crop production on agricultural land from the need to obtain a Building & Land Use Permit 
• Planters of food crops will be able to benefit from the SME scheme provided by MauBank and other commercial banks 
• Subsidy on the cost of purchase of CCTV cameras with video surveillance system will be given to planters

Investment in Infrastructure 

• The government will be investing some Rs 4.9 billion over the next three years in various projects namely: Jumbo Phoenix round about and the A1M1 Bridge, a new road will be built that will connect La Vigie and La Brasserie, and  a new road will be built that will connect La Vigie and La Brasserie.
• Infrastructural work of the Côte D’or City project at Highlands will begin in October this year and will be financed from the financial support of the Government of India, for an amount of Rs 3.6 billion. 
• Investment of Rs2.6 billion in construction works of Smart City projects. 

The Port 

• Investment of some Rs 3 billion this year and a further Rs 1.6 billion in the coming financial year. 
• Extension of the Mauritius Container Terminal berth
• MPA preparing a Master Plan for development of a quay for leisure crafts and fishing boats at Vieux Grand Port
• Construction of second breakwater by MPA
• Investment of half a billion rupees in a new Passenger Terminal Building at Les Salines
• Expanding capacity at the airport
• Master plan will be review to bring forward the construction of a second passenger terminal
• Old Passenger Terminal will be renovated and refurbished 

Improving the Quality of Life of People 

• CWA will invest some Rs 210 million in the installation of steel tanks of 2,000 cubic meters in 21 water distressed regions.
• Investment of Rs 135 million in 15 mobile plants to treat water affected by mud during heavy rainfalls. 
• Extension of water tank scheme for another year and raising income eligibility ceiling for the grant under this scheme from Rs 15,000 to Rs 25,000. 
• Installation of rain water harvesting systems in 14 primary schools. 
• Provision of Rs598 million for the installation of a water treatment plant to make the Bagatelle Dam fully operational. 
• Capacity of La Nicolière Water Treatment plant is being upgraded
• Addition of another 50 million cubic meters to water supply capacity in south and south west regions by 2022
• Provision of Rs 2.3 billion for the replacement of 264 Kilometers of pipes
• Investment of Rs400 million to improve efficiency of 150 stations
• Investment, over next three years, of some Rs 1.3 billion in construction, upgrading and cleaning of drains
• Land Drainage Authority will prepare a flood risk map and a National Land Drainage Plan will address flooding problems.  

Use of local sources of renewable energy 

• 2 MW solar PV farm will be set up by CEB (Green) Co Ltd at Henrietta by March 2018
• Some Rs 700 million will be invested in the ‘Solar Home Project’
• solar panels of 1 kw will be installed on rooftops of another 3,000 low cost houses to be constructed by the NHDC. 
• businesses will be able to deduct the investment in solar energy units from their taxable income.
• importation of incandescent lamps of 75 watts 

Waste Management 

• Investment of Rs 3.8 billion in wastewater management over next three years
• Additional 10,000 compost bins will be distributed to the population.
• Upgrading infrastructure facilities of Beach Authority, enhancing amenities at several public beaches, coastal and beach rehabilitation works and coastal adaptation projects
• Support for extension and renovation of Socio cultural organisations’ buildings.
• Trade Union Confederations will be exempted from customs duty on the purchase of a 15-seater motor vehicle. 

Sports and Leisure 

• A National Sports Policy of Rs25 million
• Upgrading of 15 major sporting infrastructure
• Provision of Rs18 million for athletes to prepare for Jeux des Iles
• Setting up of Hall of Fame and allowance scheme ranging from Rs3,000 to Rs10,000 for retired athletes who have recorded performances at senior level at African and International games and championships.  

Health Care 

• Allocation of Rs 11.6 billion to the Ministry of Health and Quality of Life
• Recruitment of 624 personnel in hospitals
• Expansion of hospital infrastructure and health care facilities namely two linear accelerator for treatment of cancer patients at Victoria and New Cancer Hospital. Three new Mediclinics, two new Community Health Centres, upgrading of Yves Cantin Community Hospital, consultancy work on the setting up of a state of the art Neurosurgery Unit at Dr Jeetoo Hospital; construction of a modern Warehouse Facility for pharmaceutical drugs and medical consumables; 5 new SAMU ambulances; Rs 1 billion for provision of acquisition of medicine, drugs and vaccines.
• Visitor Medical Visa for foreign patients
• Increase of 5% for beer and alcoholic products
• Increase of 10% for tobacco products

Livestock production

Seeing the growing interest in the livestock production, the government has announced the following:

• Upgrading of the farm buildings and associated infrastructure at the Government sheep farm at Salazie 
• A National Biosecurity Plan and a contingency plan for notifiable animal diseases will be established 
• Rs 18 million will be injected for improving animal disease surveillance and establishing animal health laboratory facilities
• The role and functions of the Division of Veterinary Services and the Mauritius Society for Animal Welfare will be reviewed 
• 24x7 Veterinary Services will be strengthened
• An initial amount of Rs 5 million to improve the pig waste treatment facility at St Martin 
• Increasing the subsidy on the price of concentrate feeds to Rs 10 million through the Livestock Feed Promotion Scheme
• Removing customs duty on all animal feed, except for poultry and pets 

Ocean Economy

The government views the ocean economy as the future pillar and hence the following announcements have been made:

• The validity of the fishing rights permit will be extended from one year to five years for fishing vessels flying the Mauritian flag
• Upgrade and equip the Maison des Pêcheurs at Cap Malheureux, Tamarin and Mahebourg
• The scheme to acquire semi-industrial vessels will be extended for another year
• Grants to the fishermen cooperative societies for the acquisition of refrigeration vehicles
• Setting up of sea-based coral farms for developing ornamental corals for the tourism sector, aquarium market and high-end jewellery manufacturing
• Appropriate amendments will be made to the Maritime Zone Act
• A new Maritime Training Institute will be set up to train the youths for jobs on cruise ships and in the maritime sector 

Tourism 

The government pronounced the following measures to strengthen the tourism sector:

• KLM in Mauritius will further open up air access to Germany, Benelux countries, Scandinavian countries and Eastern Europe
• Air Mauritius will operate an additional weekly flight to Singapore
• MTPA will promote the twin destinations offer of Bush & Beach Tourism of Kenya and Mauritius
• A voucher of Rs 200 discount on a minimum purchase of Rs 1,000 of Mauritian handicraft products will be given will be given to tourists 
• Hotels will be allowed to host gaming machines within their premises, subject to access being restricted to non-residents and foreigners only and against payment of the appropriate license fee and betting tax 
• A no citizen acquiring a residential property for an amount below USD 500, 000 will be entitled to a Multi-Entry Visa for a maximum of 180 days per year for a consecutive period of 5 years and renewable every 5 years depending on the status of ownership

Financial services

For the financial services sector the following measures have been elaborated: 

• A blueprint will be elaborated by the Ministry of Financial Services, Good Governance and Institutional Reforms with other stakeholders 
• A GBC1 company must fulfil at least one of six criteria established by the FSC to demonstrate substance. They will henceforth be required to fulfil at least two of the criteria – thus making the guidelines more stringent on the substance requirement.
• Amendment in the Companies Act 2001 to allow for Islamic Financial Institutions and Islamic Banks to adopt accounting standards issued by the Accounting and Auditing Organisation for Islamic Financial institution.
• The Stock Exchange of Mauritius will engage with Euroclear to transform the local debt market and set up an international capital market 
• Special Purpose Funds will be aligned with those of GBC1 companies
• Creation of Regional Fintech Association
• The minimum capital requirement of banks will be raised from Rs 200 million to Rs 400 million 

Creative industry

The government has announced a series of measures to support artists and to optimize the potential of the creative sector for economic growth, job creation and social inclusion:

• A sum of Rs 50 million for the Setting up of a National Arts Fund to finance activities for performing as well as fine arts, such as for recording of music, concerts and sales and exhibition of art work
• Government will invest in the setting up of a Médiathèque, which will serve as a repertoire of our folkloric songs, such as collections of Séga, Geet Gawai, Qawwali and Bhojpuri songs
• An annual national award ceremony will be organised to give recognition to local artists
• Creation of a “Village des Artistes” at the site of Batterie de l’Harmonie at Les Salines, Rivière Noire
• Developing an Art Zone at the Granary
• Construction of a ‘Palais des Arts et de la Culture’ at Côte D’or City in Highlands
• Courses will be offered under the National Skills Development Programme 

Digital economy

The government is willing to make Mauritius a fully-fledged digital economy by these measures: 

• The prices of International Private Leased Circuits (IPLC) and Global Multiprotocol Label Switching (MPLS) services will be lowered by at least 15% as from 1st of July 2017
• The Data Protection Act will be amended
• New technologies like robotics, Big Data and 
• Internet of Things at the Réduit Polytechnic will be built A cloud computing integrated platform to offer a ‘Mauritius ICT plug and play platform’will be set up 
• Mauricloud will be created to offer a platform for issuance and verification of documents & certificates in a digital way
• A Digital Youth Engagement Programme will be set up
• Setting up an Open Data Portal
• A new policy to encourage firms to allow their employees to work at home 

Judiciary

• Design of the Supreme Court Tower will be ready by the end of this month and construction should start by the end of this year. 
• Rs 15 million for a modern computerised system to better monitor payment of fines and other court fees and keep track of the progress of cases. 

Drug Trafficking 

• Provision of Rs 100 million to equip the MRA customs with modern and sophisticated tools to detect drugs entering our country through the seaport and airport. 
• Coming up of a National Drug Control Master plan with assistance of the United Nations Office on Drug and Crime
• Doubling of provision for acquisition of vehicles and equipment for ADSU and 450 manpower 
• Acquisition of two body scanners for the Melrose and Beau Bassin Prisons and for the recruitment of 35 Prison officers.
• Gambling Regulatory Authority Act will be amended to ban cash betting transactions above Rs 2,000; to introduce an account based betting together with a player card program/system; and to make it mandatory for licensees/operators earning Rs10 million or above, to report and file suspicious transactions to the Authorities.  

Supporting victims of domestic violence

• Recruitment of an additional 7 Family Welfare and Protection Officers and 6 more Enforcement Officers at the Ministry of Gender Equality.
• Children’s Bill that will give effect to the Convention on the Rights of the Child and providing the framework for better protection and care to children. 

Public Sector Reforms

• Establisment of the Mauritius National Investment Authority to invest, locally and globally, the 52 surplus funds of the NPF and NSF which amount to some Rs 130 billion. 
• The Public Procurement Act will be amended to allow a Public Body to exclude bidders whose performance in previous public contract has shown deficiencies.