Mauritius Budget sets agenda for “new normal”

The Mauritius Minister of Finance, Economic Planning and Development presented the 2020 Budget on 4 June. Entitled “Our new normal: the economy of life”, the Budget sets out the post Covid-19 agenda with measures presented under a “Plan de Relance de L’Investissement et de L’Economie”, including major structural reforms.

Given the European Union’s recent classification of Mauritius as a ‘high risk’ jurisdiction, to safeguard the soundness of the global business sector and the financial sector in general the government has committed to take necessary measures to comply with international best practices, including implementation of the five remaining Financial Action Task Force (FATF) recommendations by September 2020:

• Risk-based supervision
• Targeted outreach programmes to promote a clear understanding of money laundering and terrorist financing risks
• Increased reporting of suspicious transactions
• Targeted financial sanctions in cases of terrorist financing
• Timely access to beneficial ownership information

The government is also to introduce a new Anti-Money Laundering and Combatting the Financing of Terrorism (Miscellaneous) Provisions Bill to complement existing legislative framework to combat money laundering and terrorist financing. The registration of ultimate beneficial owners and for VAT purposes is also to be made mandatory at the time of incorporating a company or registering a business.

A number of amendments to Financial Services Act have been proposed. The Financial Services Commission (FSC) is to be authorised to collect information on a conglomerate group, including unregulated entities, which would have an impact on the safety and soundness of the financial group.

There is also provision for flexibility regarding filing of annual financial statements during a curfew period or situation of emergency or natural disasters, while the FSC is to be empowered to exempt licensees from filing of annual financial statements. The auditors of licensees are to be required to report irregularities to the FSC.

Attention is also paid to the recommendations of the 2017 Blueprint for financial services, including the introduction of new products to enhance the competitiveness of the Mauritian financial services sector, including:

• A Central Bank digital currency
• An insurance wrapper
• Variable Capital Companies (VCCs)
• An inaugural Sukuk issuance by the Bank of Mauritius
• Green and blue bond frameworks by the Bank of Mauritius.

The government further proposes the introduction of new frameworks for digital banking, private banking, and wealth management by the Bank of Mauritius and the setting up of a dedicated Venture Capital Market at the Stock Exchange of Mauritius (SEM) for start-ups and SMEs.

A Mauritius Investment Corporation (MIC), to be promoted by the Bank of Mauritius, will be positioned to invest in the pharmaceutical sector and ‘blue economy’ (the exploitation and preservation of the marine environment) as new strategic sectors. In the latter sector, inland aquaculture businesses will benefit from eight-year tax holidays and duty exemptions. The MIC will also allocate MUR10 billion of its portfolio for African projects.

Several incentives were announced to make it easier to attract talent and expertise to Mauritius by simplifying the existing permits and related procedures, extending their validities and providing more flexibility in terms of investments. The measures include:

• Combining the work permit and residence permit into a single permit
• Lengthening the validity of an occupation permit (OP) and a residence permit for retirees to 10 years renewable
• Lengthening the validity of a permanent residence permit from 10 to 20 years
• Reducing the minimum investment amount for obtaining an OP from USD100,000 to USD50,000
• Removing the minimum turnover and investment requirement for the innovator OP
• Ending the requirement for non-citizens who have a residence permit under various real estate schemes to have an occupation or work permit in order to invest and work in Mauritius
• Making OP and residence permit holders eligible for permanent residence permit applications if they have held the permit for three consecutive years.

Key fiscal measures in the Budget include an increase in the ‘solidarity levy’ from 5% to 25% for Mauritius citizens on their annual chargeable income in excess of MUR 3 million (approx. USD 75,000) and a levy ranging from 0.1% to 0.3% on corporates with annual gross income of the company or the group exceeding MUR 500 million (approx. USD 12.5 million).