This Budget brief is based on the Budget Speech presented to the National Assembly by the Deputy Prime Minister, Minister of Finance and Economic Development, Honourable Charles Gaëtan Xavier-Luc Duval on Friday 9th of November 2012.
This Budget is structured towards the following: accelerating the technological transition; continuing to focus on Africa strategy; supporting growth and creating employment; strengthening health services; protecting the most vulnerable; and ensuring sound macro-economic management. The focus is to consolidate booming industries, such as financial services, whilst at the same time giving a spur to the other pillars like the tourism sector, health sector, manufacturing sector and so on.
Focus on the Real Estate sector.
Government Spending on Infrastructure & Real Estate (Rs. 7,844 billion)
The real estate and construction sector, an essential component of the investment strategy of Mauritius, has accounted for more than 40% of the total influx of Foreign Direct Investment (FDI) for the past 5 years. For 2012, the sector is expected to attract investment amounting to Rs. 27.4 billion out of which FDI representing Rs. 5.5 billion. Moreover, the sector accounts for 19% of the country’s GDP employing some 90 800 people.
Highlights on the real estate and construction sector:
A major boost has been given by the Government to promote the creation of housing estates geared towards the middle income group and helping first time buyers onto the property ladder. Relaxation of the rights to acquire property by foreigners should support the construction sector. More clarity will be provided towards the transfer of immovable property and Land Conversion Permit. Rationalization of IRS and RES taxes should be a welcomed measure.
EXEMPTIONS
Full exemption from registration duty on the purchase of a residential unit not exceeding Rs. 4m (up from Rs. 2.5m) and on land purchase of Rs.1 million (up from Rs. 750 000) for first time buyers
The buyer will qualify for the exemption provided that:
• The transfer is in relation to the construction project of at least 5 residential units;
• He or his spouse is, or was, not the sole owner of any immovable property
• In case he or his spouse is, or was, the co-owner of any immovable property, the total income of the transferee and his spouse, in the income year in which the transfer is made, does not exceed , in the aggregate, 2 million rupees
• He is a citizen of Mauritius
• The transfer is not in respect of an immovable property under the IRS or RES
EXPATS, IRS & RES
Non-citizens allowed to acquire an apartment in ground +2 complex for :
• A professional earning a monthly salary of at least USD 3000 per month, issued with an occupational permit and any non-citizen who has been issued with a permanent residence permit.
• Any investor investing more than USD 100 000
• Any investor investing a minimum of USD 500 000 in a qualifying business activity
The dependents of IRS and eligible RES buyers (i.e those investing in excess of USD 500 000 in the acquisition of a residential property) will be granted a residence permit up to the age of 24
The registration duty with respect to the acquisition of a residential unit by Mauritians and residents under IRSand RES will be reviewed
TRANSFER TAXES AND REGISTRATION DUTIES
• For sales made under the provision of a Vente en Etat Future d’Achèvement (VEFA), directly or indirectly during construction of a floor in a high rise building, registration duty and land transfer tax will be payable on the value of the immovable property being transferred.
• Where a company owner of an immovable property issues new shares, the registration duty and land transfer tax will be payable on the value of the immovable property transferred and not on the lower value of the shares and the value of the immovable property.
LAND CONVERSION TAX
No land conversion tax will be payable on the conversion of land from agricultural use for the purpose of the following:
• Construction of an 18-hole golf course;
• Setting up of a manufacturing company as certified by the Board of Investment;
• Setting up a power station for generation of energy using “green”/renewable resources; and
• Construction of a building to be used for the provision of Technical and Vocational Education and Training.
The land conversion tax exemption will lapse if construction does not start within 6 months after the receipt of the Building and Land Use permit. The exemption on the land conversion tax confirms Governments policy on the emerging pillars, the MID agenda and education.
Conclusion
Overall, the focus of the budget seems to be social welfare. The Minister has introduced numerous subtle measures to boost foreign direct investment and SMEs which in aggregation should help to maintain the resilience of the Mauritian economy, in the current global economic context, especially in Europe.
Written By
Dany Gowsee
