Mauritius - Budget 2012 Highlights: Boosting investment & growth & stimulating financial services

To provide leadership in investment and job creation against a background of crisis, the 2012 Budget provides for the setting up of a Resilience Plan for the next three years. It will cover all enterprises with focus on SMEs, infrastructure development and job creation. The main strategies of the Resilience Plan are:

• Supporting Enterprises at the Microeconomic Level. This will involve the creation of a National Resilience Fund (NRF) of Rs 7.3 billion that will be used both as a contingency fund to strengthen the resilience of the economy and as a rainy day fund to shore up public finances.
• More Government Spending on Infrastructure. Some Rs 21.2 billion will be injected in the economy for key infrastructure projects and as a lever to increase investment, employment and growth during the crisis.
• Financial System Stability. Measures will be based on IMF recommendations on how to ensure a well-coordinated watch on the stability of our financial system.
• Coherent Macroeconomic Response. It aims at implementing mechanisms to ensure coherence in fiscal and monetary policies.

Tax reforms

The 2012 Budget also makes provision for reforms in tax policies in order to promote investment. These changes include:

• The abolition of the solidarity tax on dividends and interest.
• The abolition of the capital gains tax on immovable property.
• The abolition of the municipal tenant’s tax. Government will disburse some Rs 175 million rupees per year to the municipalities as compensation for the revenue foregone.
• The removal of land transfer tax on the sale of immovable property by financial institutions relating to debt recovery.
• The environment protection fee to be levied only on hotels, guest houses and tourist residences that obtain profits.
• The tax holiday of Freeport operators to be carried forward indefinitely.

Financial services

In a bid to stimulate the sector, the 2012 Budget proposes strong support to the financial services industry to weave new business links with the rest of the world, comply fully with international norms and diversify its products. To this end, a legal framework to promote Foundations, Private Occupational Pensions and new concepts of Trusts will be set out. These aim at significantly widening the spectrum of financial vehicles in our jurisdiction.