Mauritius: Selected Issues

Mauritius: Selected Issues
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Volume/Issue: Volume 2024 Issue 140
Publication date: May 2024
ISBN: 9798400276965
$20.00
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Topics covered in this book

This title contains information about the following subjects. Click on a subject if you would like to see other titles with the same subjects.

Money and Monetary Policy , Public Finance , Taxation - General , International - Economics , Gender Studies , gender equality indicator , reform option , revenue collection , tax revenue in Mauritius , parental leave legislation , Personal income tax , Gender inequality , Women , Tax gap , Global , Sub-Saharan Africa

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Summary

This Selected Issues paper focuses on improving revenue mobilization in Mauritius and assessing the potential and reform options. The tax gap in Mauritius is estimated at 5.6 percent of gross domestic product (GDP), at the top end of tax gaps of its peers. Both domestic and international taxation reforms could help narrow the gap. Reforming the personal income tax (PIT) and the value added tax (VAT) could altogether yield 3 percent of GDP in additional tax revenue. This could be achieved by lowering PIT thresholds, while increasing the top rates, and streamlining VAT exemptions. The expected implementation of the global minimum tax on corporations internationally provides an opportunity to reconsider the tax policy approach to investment promotion in Mauritius. A desirable strategy for Mauritius would be to move away from the generous benefits offered, including tax holidays, toward a more neutral taxation of investments. While there is potential to mobilize additional revenue through tax reforms, care should be taken that vulnerable households are protected, including through compensatory social spending.