Finance Act 2015 Update

D.RamdinDirector, Operational services, MRA

5 June 2015

Individual Income tax

• S 2 - Year means a period of 12 months commencing on 1July.

• The change does not affect companies which will continue to submit their annual return 6 months after accounting year end.

• For individual income tax - transitional measures provided in S 161A. The 6 months period from1 Jan 2015 to 30 June 2015 shall be the basis period for YOA 2015-16

Change in income year end from 31 Dec to 30 June

• Employers to give Statement of Emoluments to employees and file ROE to MRA by 15 August.

• Payers to give Statement of Income Received to payees and file TDS return to MRA by 15 August.

• Individuals should file annual return by 30 September and if electronically by 15 October

• Société and succession to prepare accounts to 30 June. Six months accounts to period ended 30.6.15.

• Every société deriving business income should file return to MRA by 30 Sept and give Statement of share of income to associate.

Change in income year end from 31 Dec to 30 June(cont)

Asst Year 2015 2015-2016 2016-2017

Income Year 1.1.14 -31.12.14 1.1.15 – 30.6.15 1.7.15 – 30.6.16

12 months 6 months 12 months

IET

Cat A – no dependent 275,000 137,500 285,000

Cat B – one dependent 385,000 192,500 395,000

Cat C – two dependents 445,000 222,500 455,000

Cat D – 3 dependents 485,000 242,500 495,000

Cat E – Retired/disabled no dependent

325,000 162,500 335,000

Cat F – Retired/disabled one dependent

435,000 217,500 445,000

Personal reliefs and deductions

Asst Year 2015 2015-2016 2016-2017Additional Exemption for child studying undergraduate

- studying in Mauritius Rs 80,000 40,000 Rs 135,000 – max years -increased from 3 to 6

- outside Mauritius Rs 125,000Max 3 years

62,500Max 3 years

Interest relief on secured housing loan

Rs 120,000Max 5 years

Rs 60,000Max 5 years

No limit onAmount and no. of years

Personal reliefs and deductions

Relief for medical or health insurance premium

Asst Year 2015 2015-2016 2016-2017Cat A – no dependent 12,000 6,000 12,000

Cat B – one dependent 12,000 + 12,000 6,000 + 6,000 12,000 + 12,000

Cat C – two dependents 12,000 + 12,000 + 6,000

6,000 + 6,000+ 3,000

12,000 + 12,000+ 6,000

Cat D – 3 dependents 12,000 + 12,000 + 6,000 + 6,000

6,000 + 6,000+ 3,000 + 3,000

12,000 + 12,000+ 6,000 + 6,000

Cat E – Retired/disabled no dependent

12,000 6,000 12,000

Cat F – Retired/disabled one dependent

12,000 + 12,000 6,000 + 6,000 12,000 + 12,000

Personal reliefs and deductions

• An individual who invests in solar energy unit, including photovoltaic kits and battery for storage of electricity is entitled to deduct the amount invested from his net income.

• In case of couple, the deduction may be taken by one spouse or shared equally.

• Any unrelieved amount in an income year may be carried forward and deducted against net income of succeeding years.

Solar Energy Investment Allowance

• Exemption limit of lump sum on commutation of pension, retiring allowance, severance allowance etc. increased from Rs 1.5 million to Rs 2 million.

• Basic retirement pension paid to a charitable institution.

• Income derived by a person engaged in bio-farming approved by FAREI for 8 succeeding years as from income year in which activity is started.

• Income derived by a member of Mauritian diaspora for first 10 years as from year of return.

Exempt income

Recap – CPS Statement

• ‘every individual who derives gross income falling under this sub-part and, in respect of preceding income year, had a chargeable income, shall submit to the Director-General a CPS Statement ..’

• An individual shall not submit a CPS Statement where:

– His gross income falling under CPS for the preceding income year did not exceed Rs 2 million;

– The tax payable based on 25% of the chargeable income of preceding year is less than Rs 500.

In respect of quarter ended Due date for submission of CPS Statement and payment of tax

1 July to 30 September 2 days, excluding Saturdays and public holidays, before the end of December

1 October to 31December 31 March

1 January to 31 March 2 days, excluding Saturdays and public holidays, before the end of June

S 106(1) CPS due date

Corporate tax

• ‘Small company’ means a co. incorporated under Companies Act on or after 2 June 2015 and registered with SMEDA.

• Where the small company qualifies under a scheme referred to under section 5A of SMEDA Act, it shall be exempt from:– income tax;– operation of TDS under S 111C

• Exemption not to exceed 8 years • Unrelieved losses during period of exemption not

available for carry forward

Small company registered with SMEDA – ITA new section 49B

(i) stipulates that the due date for payment of APS is 3 months from the end of month in which a quarter ends.

(ii) Where an APS quarter ends in the month of September, the due date for payment is 2 clear days before end of December

(iii) Where an APS quarter ends in the month of March, the due date for payment is 2 clear days before end of June

(iv) APS threshold is increased from turnover of Rs 4 million to Rs 10 million

S 50B Advance Payment System

(iv) APS threshold is increased from turnover of Rs 4 million to Rs 10 million

(v) Where a company’s accounting period ends in the month of June and is required to file an APS statement in respect of the third quarter , it may opt to file an APS Statement for 4th quarter

(vi) Due date for submission of 4th APS quarter and payment of tax is 30th September

(vii) where a company submits an APS Statement for its 4th quarter, the due date for submission of APS for the 1st quarter of the succeeding year is 31th January after the end of that quarter

S 50B Advance Payment System

• AMT abolished with effect from Year of Assessment commencing on 1st July 2015.

S 44 A - Alternative Minimum Tax

• Banks would continue to pay the Special Levy at the current rate of 3.4% of book profit and 1% of operating income.

• Lower rates of 1.7 % and 1% would be applicable as from Year of Asst commencing 1 July 2018 instead of 1 Jan 2016.

S 50 H Special levy on banks

• The solidarity levy at the current rate of 5% of book profit and 1.5 % of turnover shall continue to be applicable for Years of Assessment commencing 1 Jan 2015, 1 July 2015 to 1 July 2017.

• The last applicable Year was - YOA commencing 1 Jan 2014. Applicability has been extended by 3 years to now end as from YOA commencing 1 July 2018.

S 50I - Solidarity levy on telephony service providers

• Every company shall set up a CSR Fund equivalent to 2% of its chargeable income of the preceding year to implement a CSR programme in accordance with its own CSR Framework.

• Approval of CSR Committee no more required.

S 50 L - CSR Fund

• CSR programme– a programme having as its main objects the

alleviation of poverty, the relief of sickness or disability, the advancement of education of vulnerable persons,

• Details of CSR projects implemented to be given in annex to tax return

CSR Fund (cont)

• Minister may enter into arrangement with a country for relief from double taxation and for exchange of information in respect of taxes of every kind and description under the arrangement.

• Notwithstanding the secrecy provision the MRA may disclosed information to a person authorised by Government.

• MRA may, for implementation of an arrangement, require any person to establish, maintain and document a due diligence procedure.

S 76 - Arrangement for relief from double taxation and exchange of

information

• S93(4A) deleted . • Employers who are charged penalties for

late submission of ROE may now lodge an objection if they are dissatisfied. Representation directly to ARC abolished.

Penalty for late submission of ROE by employer

• Definition of payer amended so that it does not include a company which has an annual turnover not exceeding Rs 6 million.

TDS

• Where a company’s accounting period ends in month of June and it has submitted an APS Statement for 4th quarter, the due date for its annual return is 31 January following the accounting period.

• Where a company’s accounting period ends in month of December, the due date for submission of return and payment of tax is 2 days, excluding Saturdays and public holidays, before end of June.

S 116 Return of income by companies

• A person who has an approved return date falling between 1 Jan to 29 June, a return submitted by him under S116 shall be considered to be in respect of the income year ending on 30 June following that return date. E.g Acct year ending 31 March 2015 – deemed to be for income year ended on 30.6.15 –Asst Year 2015-2016

118A Return of income in respect of approved return date

• Where a person is a small enterprise with annual turnover not exceeding Rs 10 million, the total penalty for late submission of annual return shall not exceed Rs 5,000 it was Rs 20,000 previously.

• A company that is required to file its annual return in foreign currency, its shall pay the penalty for late submission converted into the same foreign currency at the exchange rate determined by MRA under S 7 of Customs Act.

S 121 Penalty for late submission of returns of income

• Where the taxpayer is a small enterprise with annual turnover not exceeding Rs 10 million, the penalty for late payment of tax shall be 2% instead 5%.

S 122 Penalty for late payment of tax

• Any person who fails to pay tax under S 100 (PAYE), S 111F(TDS), or S129A (Assessment on employer/payer) shall be liable to pay in addition to tax and penalty, interest at rate of 1% per month.

• Any person who fails to pay tax under section 50F, 106, 112, 116, 119, 129 or 131 shall in addition to the tax and penalty be liable to interest at the rate of 0.5% per month.

S 122D Interest on unpaid tax

• A small enterprise may apply to MRA for his net income from business to be determined on cash basis instead of accrual basis.

• cash basis to be applied as from the date approved by MRA and on such conditions as may be prescribed.

• ‘small enterprise’ means a person whose turnover is below Rs 10 million but excludes a GBL1 and non-resident societe.

Cash accounting

• MRA shall not in relation to the tax liability of a person:– (a) require any information, statement or return– (b) make any assessment or claim

in respect of 3 years of assessment preceding the current year of assessment.

to be effective as from a date to be proclaimed

S 123 A - Act or thing in respect of period before 3 years of Asst

• A co having a turnover exceeding Rs 100 million has to submit a statement giving details in respect of payments made for the purchase of goods and services exceeding Rs 100,000.

• Once a co has obligation it shall continue to file unless otherwise authorised by MRA

• Monthly penalty of Rs 5,000 applies up to max of Rs 20,000. May also be prosecuted and be liable to a fine of Rs50,000

S123 B - Return for supply of goods and services

• S124(1) – Obligation to furnish information:– notwithstanding S64 of Banking Act’, every

person shall furnish information when required by DG.

• S127(1) & (2) – Time limit to furnish information and production of books and records– time limit reduced from 4 Years of Asst to 3

years

Request for information

• Time limit to raise asst reduced from 4 years to 3 years of Asst

• Power authorising DG to raise asst for time barred years on ground that no return filed under S 112 or S 116 or in case of willful neglect or fraud abolished.

( to be effective as from date proclaimed)

S130 - Time limit to make asst

• Subsection (1) is amended so that besides sending a objection on an approved form by registered post the taxpayer may now also send the form electronically through a computer system approved by MRA.

• Subsection 2(b) is amended so that at time of making objection, a person should now pay 10% of amount of income tax claimed instead of 30% previously. Effective as from 1 July 2015

S 131A - Objection to Assessment

• S 131AA – New section added– effective 1.7.15• A person who has been issued a penalty claim

under S93(ROE), S111K(TDS Return) or 123B(5) (Return of supply of goods and services), may object to the claim.

• The taxpayer should object within 28 days of issue of claim, give grounds of objection and if not already done, submit the ROE/ return within 28 days. In case of non compliance, objection shall lapse.

131AA- Objection to penalty claims

• Late objection due to illness or reasonable cause may be considered. Where late objection not accepted, MRA should notify the taxpayer within 28 days of receipt of objection.

• MRA to determine objection within 4 months• A person aggrieved by determination may

within 28 days lodge written representations to ARC.

131 AA - Objection to penalty claims

• DG to review claim and revise penalty charged under S 93, 111k or 123B(3) in whole or in part.

• Notice of determination to be given to objector within 4 months of date of objection.

S131B - Objection to assessments(cont)

• New subsection 10 added to S131B– Where an agreement is reached before, or a

decision is made by ARC, MRA shall, within 5 working days of the date of receipt of notification of agreement or decision inform the person of the amount of income tax payable.

• Where notice is issued, the person shall pay the amount within 28 days of date of notice.

S131B - Objection to assessments

• S 93 and 111K deleted from list of decision/determination against which representation to ARC is allowed.

• therefore direct representation to ARC following penalty claims for late filing of ROE and TDS Return abolished. TP should go through objection procedures first.

- effective as from 1 July 2015

S 134 - Representation to ARC

• privilege inscribed on the properties of a debtor may be partly erased provided the other properties of the person is sufficient to secure payment of the tax.

• Where a privilege is erased, the MRA must notify the taxpayer within 5 working days from date of notification by the Conservator of Mortgages.

S141 - Privilege

Gaming Regulatory Authority Act

• Gaming House A in Mauritius – taxed at 30% of gross takings instead of 15%.

• Totalisator operator conducting bets (other than win and place) through remote communication reduced from 12% to 10%.

Gaming and betting tax

Thank You

Questions welcomed