The VAT Refund Scheme allows citizens of Mauritius to claim up to Rs 500,000 of the VAT amount incurred during the construction of their residential building.
Although it might be tempting to hire an unlicensed contractor for the seemingly low costs, you are ending up paying more money for less value (No guarantees or insurance, potential construction site desertion and lack of skills).
However, given that a registered contractor has to charge Value Added Tax by law, they must cost significantly more, right? Well, thanks to the Mauritius Revenue Authority’s VAT Refund Scheme on Residential Building, this could not be any further from the truth.
What are the steps to undertake in order to benefit from the VAT Refund scheme?
1. Determine whether you are eligible for the VAT refund
The VAT Refund Scheme on Residential Building is accessible to citizens of Mauritius over the age of 18. You should be the owner or co-owner, along with your spouse, of the residential building or apartment, and both of your annual net income must not, in the aggregate, exceed Rs 2 Million (In the budget speech for 2019 – 2020, it was announced that this threshold would be increased to Rs 3.5 million).
2. Determine whether your project is eligible for the VAT refund
The total cost of construction of the residential building should not exceed Rs 4 million. In the budget speech for 2019 – 2020, it was announced that this upper limit would be increased to Rs 5 million.
As mentioned above, you should also hire a registered contractor who can issue VAT invoices and provide you with a contract of service in the proper form.
The scope of this scheme will however exclude projects in relation to the following:
- Construction on ‘Pas Géométriques’
- Real State under the Investment Promotion (Real State Development Scheme) Regulations 2007
- Property Development under the Investment Promotion (Property Development Scheme) Regulations 2015
- Invest Hotel under the Investment Promotion (Invest Hotel Scheme) Regulations 2015
- Smart City under the Investment Promotion (Smart City Scheme) Regulations 2015
3. Calculate how much you can claim
The cumulated VAT amount refunded will not, in the aggregate, exceed Rs 500,000. In the scenario where you are making instalment payments to the contractor as per the advancement of the project, the minimum amount claimable per quarter is Rs 25,000. Whenever this amount is less than Rs 25,000, it may be cumulated with the next quarter as long as the cumulated amount exceeds Rs 25,000.
As per the MRA, a quarter is a period of 3 months ending at the end of March, June, September or December.
4. Check whether you are within the deadlines
The construction of the residential building must be started and completed before the 30th June 2025 (Duration of scheme extended from 30th June 2020 as from Budget Speech 2019 – 2020).
You should submit your application for refund to the MRA within 30 days from the end of every quarter during which you have paid the VAT to the contractor.
In the case seen earlier where your quarterly VAT amount does not exceed Rs 25,000 and you are applying for a refund in posterior quarters, the application will not be valid if it is made more than 12 months from the date of payment of the final amount of VAT to the contractor.
The MRA should proceed with the refund not later than 30 days from the date of receipt of the application. The application could of course be delayed in case of incomplete or incorrect information.
Download the form for the refund here.
5. File your claim for VAT refund
You should be submitting the following documents with your first application for refund:
- VAT invoices issued by your contractor.
- Contract of service between you and your building contractor.
- Building permit issued by the District Council or Municipality and bearing your name.
- Deed of purchase of land.
- Evidence of income (Pay slip for employee or income statements for self-employed).
For the succeeding claims, you would only need to submit your subsequent VAT invoices.
- The construction must be started and completed by 30 June 2020 (Extended to 30 June 2025).
- This scheme is aimed at adult citizens of Mauritius only.
- You or your spouse should be the owner or co-owners of the residential building.
- The total annual income of both your spouse and you should not exceed Rs 2 million (Limit increased to Rs 3.5 Million).
- The cost of construction must not exceed Rs 4 million (Limit now set to Rs 5 million).
- Always go with a registered contractor.
- Claims for refund should be made within 30 days from the end of every quarter during which VAT has been paid.