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MAURITIUS: Investors in Innovative Sectors Courted with Tax Breaks

Companies can now enjoy lengthy tax holidays on income derived from innovative technologies developed in Mauritius. Sectors set to benefit include information technology, e-commerce, banking and energy. 

The changes were announced by the Mauritius government, which published several amendments to its tax regime in the Official Gazette, enacting proposals in its 2019-2020 Budget. The Finance (Miscellaneous Provisions) Act (No. 13 of 2019) contains sweeping changes to the country’s tax regime, and provides tax holidays for companies involved in a number of innovative and technological sectors. It has also introduced changes in its tax and regulation plans for banks and financial technology (fintech) firms.

Under the new regime, a company set up after 10 June 2019 that develops innovation-driven technologies will benefit from an income tax holiday for eight years on revenues it receives from the intellectual property assets that have been developed in Mauritius. Existing companies will also benefit from the tax holiday on such income if received after 10 June 2019.

There is also a five-year tax holiday for companies that set up an e-commerce platform in the country, provided that the company is incorporated in Mauritius before 30 June 2025. For P2P lending platforms, a five-year tax waiver is also offered, but the company must start operating before 31 December 2020. For companies engaged in the bunkering of low sulphur heavy fuel oil, Mauritius is offering a four-year tax holiday.

There are also measures to improve tax relief for expensing of capital goods. The ceiling on capital expenditure incurred on plant or machinery that may be fully expensed in the year incurred, has been increased from MUR30,000 (US$835) to MUR60,000 in the bill. Changes have also been made to carrying forward losses. Previously, the accumulated losses of a company would lapse if there was a change in the majority ownership of the company. Under the new regime, in the case of a manufacturing company, the government may allow the carry forward of the losses if authorities are satisfied that it is in the public interest to do so, and provided conditions relating to safeguard of employment are complied with.

Measures in the bill also include actions to encourage investment in financial services innovation. The Mauritian Financial Services Commission has been tasked with establishing a regime for robotics and artificial intelligence enabled financial advisory services; introducing a new licence scheme for fintech service providers; piloting the use of e-signatures and e-licences; and establishing crowd funding as a new licensable activity.

Content provided by Picture: HKTDC Research
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