Addressing the country's parliament late on Monday, Finance Minister Pravind Jugnauth announced the abolition of an 80% tax on about 1850 varieties of goods, including fabrics, electronics and jewellery.
"I announce today a historic decision to make Mauritius a duty-free island," he said. "There is a national purpose for making this historic decision: it is to transform Mauritius into a shopping paradise for tourists.
"It is to create a new and unprecedented dynamism ... for investment and to take big steps toward the full-employment growth path," he said, adding that the move would help improve the country's economic situation.
Unemployment in Mauritius was last calculated at 8.4% in September and domestic growth for 2004 was estimated at 4.2 % with 5.7% inflation, according to official statistics.
"It is to transform Mauritius into a shopping paradise for tourists"
Mauritius Finance Minister
Creating the shopping paradise, long a dream of authorities on the francophone island, will occur over four years and, along with the removal of taxes, will include incentives for local and international investors to build massive retail centres, Jugnauth said.
He added: "We are setting up a shopping mall scheme to promote, encourage and facilitate the development of modern integrated business, shopping and leisure centres."
Tourists to Mauritius, drawn by its beaches, are already foresaking sun-tanning and water sports on the coast and heading inland to take advantage of organised spending sprees, many in Floreal, southeast of Port Louis, where there are dozens of factory outlet shops.
In January, island officials said they were actively pursuing plans to transform Mauritius further into a shopping paradise for inexpensive luxury items, particularly as its industry faces an uncertain future with the abolition of global textile quotas.
In addition to the bold tax plan introduced by Jugnauth, Mauritian Prime Minister Paul Berenger announced that parliament would be dissolved this month in order for general elections to be held before September.
He did not announce a precise date for the polls.