Mauritian Budget 2021-22: Salient points

15/06/2021

On Friday 11^th of June 2021, the Mauritian Finance Minister delivered its budget speech for the year 2021/2022. Stating that “Vaccination is the game changer” and aiming to reach collective immunity with the ongoing mass vaccination campaign, the 2021/2022 budget was focussed on ACCELERATING ECONOMIC RECOVERY, TIGGERING REVIVAL AND STRENGTHENING RESILIENCE. In order to achieve this objective, the Finance Minister set out a strategy based on 3 main pillars; namely:

GIVING AN EXCEPTIONAL BOOST TO INVESTMENT
SHAPING A NEW ECONOMIC ARCHITECTURE
RESTORING CONFIDENCE

KEY ECONOMIC INDICATORS

Forecasted revenue: Rs137,700 million
Forecasted expenditure: Rs 179,001 million
Budget deficit: Rs 41,301 million. From 5.6% in 2020/2021 to 5% in 2021/2022
Inflation rate 2020: 2.5%
GDP growth rate: From 5.4% in 2020/2021 to 9% in 2021/2022

OPENING OF THE MAURITIAN BORDERS
For Visitors:
The opening of the Mauritian borders will be in 2 phases:

As from 15^th July 2021, Mauritius will be open to all vaccinated visitors for resort tourism. A tourist will be allowed to leave the hotel after 14 days with a negative PCR test; and
As from 1^st October 2021, subject to preconditions being met, all vaccinated tourists with a negative PCR test will be allowed on the Mauritian territory without any restrictions.

For Occupation Permit:

The occupation permit will be reviewed as follows:
1. The validity period for an Occupation Permit for Professionals is being extended from 3 years to 10 years
2. Spouses of OP holders wishing to invest or work in Mauritius will be exempted from applying for an Occupation Permit or work permit
3. The maximum age limit of 24 years for dependents will be waived
Introduction of a new category – the 10-Year Family Occupation Permit for those contributing USD 250,000 to the COVID-19 Projects Development Fund
Set up of a dedicated concierge service by the EDB to provide a seamless experience to investors and retirees entering Mauritius
Implementation of a privilege club scheme providing a range of incentives to Occupation Permit holders and retirees, ranging from privilege access to hotels, golf courses, restaurants, private medical institutions, amongst others

THE FINANCIAL SERVICES INDUSTRY
The Financial services sector is one of the few sectors that has registered a positive growth in 2020. The 2021-2022 strategy for the financial services sector is as follows:

First, to enhance the status of the financial centre as a jurisdiction of highest global standards
Second, to continue to improve and deepen the service offerings of the financial centre

FINANCIAL CENTRE FOCUSED ON CREATING A SOLID REPUTATION ON COMPLIANCE - AML/CFT MATTERS COMPLIANCE
The Mauritian Government remains committed to be fully compliant on AML/CFT matters. In view of completing the implementation of the FATF Action Plan for an early exit of the FATF list of jurisdictions under increased monitoring, various measures including supervisory, regulatory and law enforcement have been introduced to further strengthen the sustainability and effectiveness of the AML-CFT system. Further enhancements has been announced as follows:

The AML/CFT Core Group is being given legal force under the FIAMLA
The Financial Crime Commission will be established for a more effective management in the fight against financial crime
The BOM and the FSC will launch a one-year training programme on AML and related matters for a minimum of 100 graduates with a monthly stipend.

ENHANCING THE EASE OF DOING BUSINESS ENVIRONMENT

The Government recognises that investment in the economy is dependent on the business environment. Building on its success of significant progress in recent years, the Finance Minister announced the following major reforms:

Introduction of a Regulatory Impact Assessment (RIA) Bill – Legislation that will require Regulatory bodies, amongst others to submit ab impact of upcoming regulations on the business environment
Establishment of a RIA Office under the purview of the PMO to oversee and monitor the quality of assessments
The “Silence is consent” principle will apply to licenses and permits as may be prescribed
Streamlining 16 different incentives schemes under 3 certificates issued by the EDB, namely:
1. The Investment Certificate
2. The Export Development Certificate
3. The Premium Investor Certificate
The EDB will:
1. Set up a Business Support Facility that will provide facilitation and advisory services to all business in Mauritius
2. Dedicate an accounts manager to all registered businesses
3. Implement an information sharing platform with MRA and CBRD to facilitate exchange of information between these institutions
4. Set up commissions on:
  1. Trade and Business Facilitation
  2. Export Development
  3. Investment
  4. Sectoral Development
  5. Financial Services
Automation of the public service delivery through the:
1. Development of a new Companies and Businesses Registration Integrated System
2. Development of a Notice-Based registry under the Mauritius E-Registry system
3. Upgrading of the E-Judiciary System
Launching of the FSC One platform as an online licensing portal as from 1^st July 2021

IMPROVING AND DEEPENING THE SERVICE OFFERINGS

Introduction of a Securitisation Bill
Introduction of a new Securities Bill
Enactment of a new legislation for virtual assets
Digitalisation:
1. The Bank of Mauritius will roll-out a Central Bank Digital Currency – The Digital Rupee – on a pilot basis
2. The Bank of Mauritius will introduce a dedicated QR Code at national level to facilitate digital payment
The Stock Exchange of Mauritius to introduce rules for the setting up of Special Purpose Acquisition Companies
FINTECH – The BOM and the FSC will:
1. Issue a Regulatory Sandbox Licenses for activities falling under their respective purviews
2. Set up a common platform for fitness and propriety of investors and professionals operating in the sector
3. Revamp the existing framework for investment banking activities
4. Set up a single desk for all FinTech related applications
5. BOM to set up FinTech innovation hubs and digital labs for the banking sector
6. FSC to set up FinTech innovation hubs and digital labs for the non-banking financial sector

TAX REGIME
The Income Tax Act will be amended to:

Broaden the scope of partial exemption tax regime to cover licensed investment dealers and activities relating to the leasing of locomotives and train including rails leasing
Extend the existing incentive to employees of licensees of the FSC who are issued with an Asset Manager Certificate; or a Fund Manager Certificate; or an Asset and Fund Manager Certificate, on or after 1 September 2016, to those managing an asset base of USD 50 Million or above
Provide that dividend paid by a non-resident to another non-resident is not taxable in Mauritius
Extend the R&D tax incentive scheme (double deduction) expiring in June 2022 by 5 years, that is to June 2027
Extend the tax holiday on Family Offices and Fund and Asset Managers from 5 years to 10 years
Exclude foreign limited partnership which is a non-tax resident from the need to submit a return of dividend
Ensure Foundations and Trusts benefitting from a preferential regime comply with the OECD standards including substantial activity requirements

PROMOTING THE MAURITIUS INTERNATIONAL FINANCIAL CENTRE

The EDB will establish a dedicated commission for financial services to devise and monitor an effective and timely promotional and reputation management strategy for Mauritius as an International Financial Centre (IFC).
The BOM will enlist the services of an International consulting firm to chart the strategy for the “Future of Banking” in and from Mauritius.

For more information, please contact office@rosemont.mu