{
  "title": "Mauritius: Selected Issues",
  "publication": "IMF Staff Country Reports, May 28, 2024",
  "sourceUrl": "https://www.imf.org/en/publications/cr/issues/2024/05/28/mauritius-selected-issues-549634",
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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.",
  "sections": [
    {
      "heading": "Key findings",
      "content": "- 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.\n- Reforming the personal income tax (PIT) and the value added tax (VAT) could altogether yield 3 percent of GDP in additional tax revenue.\n- 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.\n- 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."
    },
    {
      "heading": "Tax gap and revenue mobilization potential",
      "content": "- Estimated tax gap: 5.6 percent of GDP.\n- Potential revenue from PIT and VAT reforms: 3 percent of GDP.\n- Both domestic and international taxation reforms could help narrow the tax gap."
    },
    {
      "heading": "Personal income tax (PIT) and VAT reform options",
      "content": "- PIT reform levers identified:\n  - Lowering PIT thresholds.\n  - Increasing top PIT rates.\n- VAT reform levers identified:\n  - Streamlining VAT exemptions.\n- Combined effect of PIT and VAT reforms: potential to yield 3 percent of GDP in additional tax revenue."
    },
    {
      "heading": "Corporate taxation and investment promotion",
      "content": "- Implementation of the global minimum tax on corporations internationally creates a policy window to:\n  - Reconsider the tax policy approach to investment promotion in Mauritius.\n  - Move away from generous benefits offered, including tax holidays.\n  - Shift toward a more neutral taxation of investments."
    },
    {
      "heading": "Distributional and implementation considerations",
      "content": "- Reforms that mobilize additional revenue should include measures to protect vulnerable households.\n- Protective measures could include compensatory social spending to mitigate adverse impacts on households.\n\nSource: IMF Staff Country Reports — \"Mauritius: Selected Issues\", May 28, 2024.\n\n---\n\n Content in this bundle\n\n- Mauritius: Selected Issues; IMF Country Report No. 24/140; May 1, 2024\n  - Mauritius: Selected Issues; IMF Country Report No. 24/140; May 1, 2024 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Mauritius: Selected Issues; IMF Country Report No. 24/140; May 1, 2024 (PDF){rel=\"external\" type=\"application/pdf\"}"
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    "Published: May 28, 2024",
    "Series: IMF Staff Country Reports",
    "DOI: https://doi.org/10.5089/9798400276965.002",
    "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.",
    "Reforming the personal income tax (PIT) and the value added tax (VAT) could altogether yield 3 percent of GDP in additional tax revenue.",
    "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.",
    "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.",
    "Estimated tax gap: 5.6 percent of GDP.",
    "Potential revenue from PIT and VAT reforms: 3 percent of GDP.",
    "Both domestic and international taxation reforms could help narrow the tax gap.",
    "PIT reform levers identified:",
    "VAT reform levers identified:",
    "Combined effect of PIT and VAT reforms: potential to yield 3 percent of GDP in additional tax revenue.",
    "Implementation of the global minimum tax on corporations internationally creates a policy window to:",
    "Reforms that mobilize additional revenue should include measures to protect vulnerable households.",
    "Protective measures could include compensatory social spending to mitigate adverse impacts on households.",
    "**Mauritius: Selected Issues; IMF Country Report No. 24/140; May 1, 2024**"
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