WORLD TRADE  
ORGANIZATION   
G/SCM/N/243/MUS 
4 September 2012 
 (12-4761) 
Committee on Subsidies and 
Countervailing Measures Original:   English 
 
 
 
SUBSIDIES 
 
Continuation of Extension under SCM Artic le 27.4 of the Transition Period for 
the Elimination of Export Subsidies Pursuant to the Procedures Contained 
in the General Council Decision in Document WT/L/691 
 
Updating Notification 
 
MAURITIUS 
 
  The following communication, dated 31 August 2012,  is being circulated at the request of the 
Delegation of Mauritius.  
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 1. Title of the Subsidy Programme 
  The Freeport Scheme 
 
 Description of the scheme  Corporate Tax Exemption 
 2. Period covered by the notification 
 
 June 2011-June 2012. 
 3. Policy Objectives 
  To encourage trading companies to use the Mauritius Freeport as a logistics and marketing 
platform for the re-exportation of their goods to Eastern and Southern Africa.  
 4. (a) Background authority for the Scheme 
  The Board of Investment a nd the Income Tax Department 
 
 (b) Legal Basis 
  Income Tax Act 1995 as amended by the Fi nance (Miscellaneous provisions) Act 2010  
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  5. Form of Subsidy 
 
 Corporate tax exemption on income derived fro m activities carried out in the Freeport zone 
except for Freeport operators and private Freeport de velopers licensed after 1 June 2002 to carry out 
any specified Freeport processing activities. 
 
6. Beneficiaries 
  Freeport operators and private Freeport devel opers which are engaged in processing (licensed 
on or before 1 June 2002) and those engaged in light assembly , ship building, repairs and 
maintenance. 
 7. Subsidy per unit or Total Amount 
  The Government suffers no effective loss of  income due to foregone taxes since these 
activities would not have taken place in Mauritius wit hout the existence of the Freeport and its related 
incentives.  8. Duration of the Subsidy 
  The scheme is not limited in time. 
 
9. Assessment of trade effects 
  This incentive has contributed to the development of the Mauritius Freeport.  
10. Additional information as per Ge neral Council Decision para. 2 (a) 
 
 It will be recalled that the Government of Maur itius reported in its notifi cation of 2010 of its 
intention to initiate internal step s for the eventual removal of this  programme as from 30 June 2011.  
In this respect, and in good faith, it was reported that the relevant authorities had already made 
provision under Section 8 8(b) (i) of the Additio nal Stimulus Package (Miscellaneous Provisions) 
Act 2009 for the eventual removal of this programme  as from 30 June 2011.  The beneficiaries of the 
programme were made aware that the programme w ould end as of that date since the Additional 
Stimulus Package (Miscellaneous Provisions) Act was gazetted on 16 April 2009.  However, in view 
of the 2010 world economic outlook and the econo mic situation in Mauritius, the Government 
reserved the right to review this decision in 2011. 
 
 As indicated in our 2011 notification, the decision to extend the income tax exemption was announced in the Budget Speech 2011 as a result of th e persistence of the euro-zone crisis – an 
external shock which has a menacing impact on our economy, especially on our export sectors.   As stated in the Budget Speech 2011, the Free port is an important link to the regional and 
international economy and to embrace the role as a regional trading hub the Government has decided 
to postpone by two years the return to the normal tax rate for the private Freeport developers and Freeport operators operating in the Freeport zone.   However, the income tax exemption to Free port Operators is being maintained for the 
following reasons: 
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   With ongoing Euro Zone crisis and s ubdued growth prospects in developed and 
emerging economies this is impacting ne gatively on our economic growth.  
Therefore, we have had to revise our gr owth forecasts for 2012 and 2013 downwards; 
 
 We are avoiding policies that discourage invest ment in view of the persistent fragile 
economic situation and continues un certainty on international economic 
developments; 
 
 The extension of the tax holiday is essential to  attract back investment and growth in 
the Freeport zone and also to help Mauritiu s to embrace back investment and growth 
in the Freeport zone and also to help Mauritius to embrace the role of a regional 
trading hub;  
 The majority of transactions in the Freeport relate to re-export.  Measures are also 
being put in place to better regulate the sector  and ensure that its purpose is not being 
diverted. 
  
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