Budget 2025–2026: Preliminary Overview & Potential Impact on Real Estate

Budget 2025–2026: Key Proposals Affecting Real Estate and Investment

1. Increased Transaction Costs for Non-Citizens

• Registration Duty: Proposed increase from 5% to 10% on properties acquired under schemes such as IRS, RES, PDS, SCS, IHS and Ground +2.

• Land Transfer Tax (on resale): Will increase to the higher of 10% of the sale price or 30% of the capital gain realised on resale of properties acquired under these schemes.

• Developers: Now liable for10% Land Transfer Tax on residential units sold under these schemes. These revised rates will apply to deeds registered after the Finance Act is published, even if reservation agreements were signed prior.

2. Changes to the Smart City Scheme

• Fiscal incentives withdrawn for new Smart City registrations after 5 June 2025.

• Affected incentives include VAT exemptions, 8-year income tax holidays, customs and

registration duty exemptions, and conversion/morcellement fee waivers.

• Projects with valid permits and construction underway may retain partial benefits.

• Sustainability standards will become mandatory for new projects.

3. Reforms to Property Acquisition by Non-Citizens

• Prohibition on non-citizens acquiring or disposing of apartments in certain buildings on State Land or Pas Géométriques.

• Discontinuation of the December 2023 scheme that allowed non-citizens with residence permits to acquire property outside of the regulated schemes, including bare land, for USD 500,000+.

4. Residency and Occupation Permit Revisions

• Residency duration reduced from 10 to 5 years (renewable).

• Minimum annual presence of 180 days now required for retired permit holders.

• USD 24,000 annual transfer requirement for retirees (USD 2,000/month).

• No gainful activity allowed under retirement residence permits.

• Dependent children capped at 24 years.

• Shorter durations and revised conditions for Occupation Permits, especially for younger professionals.

5. Local Market Impacts

• VAT refund scheme on new residential construction or purchases ends 30 June 2025.

• Housing subsidies and support schemes will be gradually phased out.

• Social housing eligibility expanded, and investment in national infrastructure confirmed.

• Introduction of Fair Share Contribution Tax: progressive personal and corporate taxes for high earners.

• Launch of an online permit and deed registration system, with digital signature acceptance and streamlined processing.

Our Position and Commitment

We recognise that these proposed changes—particularly the increased duties and tightened acquisition rules—may be unsettling, especially for those who have already signed agreements based on the current legal framework. We share your concern and frustration and are actively monitoring all developments.

We would like to emphasise that:

• These measures are not yet law, and implementation details remain pending.

• We are engaging with legal and government advisors to gain deeper insights into how existing commitments will be treated.

• Mauritius remains a compelling long-term investment destination, offering security, lifestyle, and a track record of stability.

Real estate has been—and continues to be—a pillar of the Mauritian economy and a major contributor to foreign direct investment. We are hopeful that final legislation will strike a balance between protecting national interests and maintaining Mauritius’ reputation as a trusted destination for international investment.

We will continue to advocate for fairness and clarity on behalf of our clients and will share verified updates with you as they become available.