Property Management 2025: Mauritius Revises Smart City Plan, Ending Tax Incentives

The government’s recent move to overhaul the Smart City program, announced in the 2025-2026 Budget on June 5, 2024, has raised concerns among real estate developers and industry players. The changes include removing tax benefits and introducing stricter land regulations, which could slow ongoing projects and make Mauritius less attractive to foreign investors.

The Budget signals a significant shift in land and property management.

The government aims to reallocate land strategically, promote food security, and ensure fair competition.

A major change is the removal of tax incentives previously granted to Smart City project developers.

However, projects already under construction will have a transition period to adapt.

Impact on the Real Estate Sector

Industry insiders are cautious about these changes. Some fear that removing fiscal incentives and increasing taxes on non-citizen property buyers could discourage foreign investment, especially in the high-end market.

According to consultancy firm Andersen, ending these benefits and raising registration and transfer taxes signal a move toward greater fiscal fairness and increased government revenue, but they may also reduce Mauritius’s appeal as an investment destination.

Kentish Moorghen, CEO of Prime Pillar Group, believes the program has strayed from its original goals.

“The Smart City initiative has been used as a label without real urban transformation,” he explained.

Moorghen emphasized that true smart cities should be based on innovation, sustainability, and integrated living, working, and leisure spaces.

He advocated for clearer standards so only projects meeting these criteria can carry the Smart City label, aiming to redefine the concept with rigor rather than abandon it.

Immediate Effects on Construction and Services

Construction companies are already feeling the impact. Stéphane Rose, finance manager at Ramasawmy & Ramasawmy Co. Ltd, reports delays in current projects.

New rules—such as the removal of tax exemptions for companies, land conversion fees, subdivision fees, and stricter environmental requirements—may lead to project cancellations.

Rose explains that these changes are affecting demand for their services. Some projects scheduled to start soon are on hold or being re-evaluated.

The new 10% tax on property purchases by foreigners could also affect sales strategies.

Subcontractors are experiencing rising costs, recruitment challenges, and thinner profit margins, creating a tense industry environment.

Details of the New Smart City Policy

Starting June 5, 2024, the government will eliminate most tax incentives for Smart City projects, except for those related to:

• Building public transport stations or terminals
• National regeneration programs

The specific incentives removed include:

• VAT exemption on buildings and infrastructure
• 8-year income tax exemption on real estate activities within the city
• Customs duties exemption on construction materials and machinery
• Exemptions on land registration and transfer taxes for Smart City companies
• Exemptions on subdivision and land conversion taxes

Projects approved with a Smart City certificate or registered after June 5, 2024, will no longer qualify for these incentives.

However, projects with permits issued and construction started before this date will retain benefits such as VAT refunds on construction costs and income tax exemptions.

Sustainability Requirements

From June 5, 2024, any new Smart City project or developer must incorporate sustainability features into their development plans.

These requirements will be detailed in guidelines issued by the Economic Development Board (EDB).

The government’s revision of the Smart City program reflects a shift toward stricter land management and increased fiscal fairness.

While intended to promote sustainability and equitable growth, these changes could slow investment and development in Mauritius’s real estate sector.

Industry stakeholders call for clearer standards and greater consultation to ensure the country remains attractive to foreign investors and sustainable urban development continues.

Source: Defi Media