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Mauritius 2025 Budget: A Blow to Real Estate Confidence
Mauritius recorded 4.7% GDP growth in 2024, with gains led by construction, tourism, and financial services. Despite stable unemployment at 6% and inflation at 3.8%, the 2025 national budget has stirred concern, particularly in the real estate sector - a major engine of foreign direct investment (FDI), contributing 56% last year.
Increase in property taxes
The government is tightening its grip on fiscal policy through several new tax measures targeting high earners, corporates, and property investors. These measures mark a sharp departure from Mauritius' long-standing zero- Capital Gains Tax (CGT) policy, risking damage to its attractiveness among foreign investors. The new measures include:
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Registration duty increased from 5% to 10% for foreign buyers under EDB and G+2 schemes.
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Land transfer tax increased from 5% to 10% for property developers of EDB residential schemes.
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Capital gains tax exclusively for non-citizens selling properties acquired through EDB and G+2 schemes, calculated at 30% of the realized gain or 10% of the property's value, whichever is higher.
End of Broad-Based Foreign Ownership
The Budget also ends the ability of non-citizens to acquire property outside of approved EDB schemes, removing the USD 500,000 minimum acquisition route that previously offered flexibility for foreign residents wishing to acquire properties outside of approved schemes.
Smart City Incentives Dismantled
The well-known Smart City Scheme is also being scaled back. Projects approved after 5 June 2025 will no longer qualify for: VAT exemptions on construction materials, 8-year corporate tax holiday, import duty relief on machinery and equipment, exemption on registration duties and land transfer fees, and exemption from morcellement fee. This dismantling of incentives is likely to stall new large-scale development, especially in mixed-use urban zones.
Phasing out home relief for citizens
The Home Ownership and Home Loan Payment schemes for first-time Mauritian buyers will be discontinued after 30 June 2025, with a complete phasing out over the next two years ending on 30 June 2027.
The new government has taken a firm stance on reducing the budget deficit through the increase of taxes - notably within the growing real estate sector. It remains to be seen how the market, which was previously well publicised as a zero capital gains tax jurisdiction, reacts to this. However it will undeniably lower the attractiveness of Mauritius as an investment destination at least in the short to medium term.
