About the Returning Resident Scheme Exemptions

Much has been said, written and canvassed around the alleged involvement of a local private sector top shot who has used the services of a professional “broker company” specialized in seeking beneficiaries of “Returning Resident Scheme”, and thereafter canvassing high profile potential buyers and proposing their “services” to avoid paying normal excise duties normally applicable to any imported vehicle in the mainstream customs regulations. The innovative guy’s ‘business model’ has apparently attracted quite a number of high-income earners among citizens and/or expatriate-cum-residents of the Republic of Mauritius. 

To date statements of the professional “broker” have been recorded, the returning resident having opted for his constitutional right to remain silent. In the meantime the top shot has been already “accused tried and found guilty and exposed to the gallows of public opinion.” This despite the fact that in our judicial system, and more so in potential criminal prosecutions, the current rule of law is that any accused is presumed to be innocent until proved guilty in a court of law.

The least one could say is that this has not been the case in this specific situation, despite the fact that media reports refer to several similar cases under scrutiny by the competent authorities, namely the MRA, concerning car deals involving Porsche Cayenne, Porsche Canamera, and even a Lamborghini…

This recent case has brought to light the many shortcomings of the current Returning Resident Scheme. As the regulation stands, it does not restrict the use of an imported vehicle to the beneficiary and his immediate family. It is thus mandatory that an amendment be brought to this regulation thereby empowering only the latter to enjoy such a facility.

Back in the 1980s, successive governments headed by Sir Anerood Jugnauth had found it fit and proper to encourage Mauritians having acquired experience and expertise abroad to return home with a view to contributing their share to the country’s progress and development. One of the conditions attached to the Returning Resident Scheme was that the beneficiary must remain at least four years in Mauritius and was not allowed to transfer or dispose of the vehicle for at least four years.

In the 1980s, it did not matter whether any other person used the vehicle or not, the objective being to ensure that the Returning Resident could bring along his personal car in Mauritius the moment he decides to relocate here. There was hardly any restriction as who should be driving the car at all.

Some 30 years since the introduction of the scheme, a Returning Resident is no longer required to have stayed ten years abroad; five years are mandatory. The exemption threshold is now limited to Rs 1.5 million.

On the other hand, Ministers, MLAs, high-ranking Civil Servants, Advisers and all heads of parastatals enjoy the privilege of running a duty-free limousine, allowing its sale after every four-year period or after duty has been paid on the vehicle. It would be interesting to have public disclosure if the beneficiaries is the same person who is actually using the vehicle, as the bone of contention in the present case is this specific point i.e. usage….

In last year’s Budget, the amount of duty exemption on cars imported under the Returning Resident Scheme has been restricted to Rs 1.5 million. But once again, no restriction has been imposed on who is capable of running the imported car.

In view of the inherent shortcomings of the Returning Resident Scheme, there is a need to reconsider the different clauses of the regulation and specifying that only the beneficiary of the Scheme and his immediate family can run the imported vehicle.

The merits and demerits of the Returning Resident Scheme shall be studied by all parties concerned. Further over and above the amendments which have been proposed here, a flat rate of duty should then be applied to all beneficiaries of all duty-free schemes such as the Returning Resident scheme and the one applied to Ministers, MLAs, high-ranking civil servants, advisors and all heads of parastatals which would thus generate a level playing field in terms of taxation on imported vehicles, thereafter making all “avoidance” appear unattractive and thus useless.

Finally one should consider investigating in depth as far as evaluation and re-evaluation of imported vehicles goes. The enquiry should cover and scrutinize recruitment criteria, training, discretionary powers if any, negotiating guidelines and powers for settlement, if any, etc. In any case it appears that there could have been in the first place some shortcomings at the level of the estimation of the said vehicle. If it has been subsequently established that there could have been under re-evaluation the question remains: Who has the last say… how can one explain such a situation and where lies the ultimate responsibility?

H. POCUS