Minister of Finance Dr Renganaden Padayachy presented the Mauritius National Budget 2023/2024 on 2 June, which was focused on strengthening, continuing and sustaining the economy.
According to the IMF’s World Economic Outlook in April 2023, Mauritius was amongst the 20 fastest growing economies in the world last year. The Mauritian economy grew at its fastest pace in over 35 years in 2022, by 8.7% compared to an initial forecast of 7.2%, while GDP exceeded earlier estimates by MUR26 billion to reach MUR570 billion.
Total investment exceeded expectations by MUR10 billion to reach MUR113 billion, a 20% increase over 2021. Foreign Direct Investment totalled MUR27.7 billion, 50% higher than in 2021, while exports of goods and services totalled MUR320 billion, an increase of MUR40 billion over earlier estimates and a surge of MUR110 billion compared to 2021.
The above measures will consolidate Mauritius as an international financial centre of choice for cross-border investments. Moreover, these measures will provide investors with a secure and robust platform for international markets and encourage them to structure their investments from Mauritius.
Mauritius was delisted by the Financial Action Task Force (FATF) list of jurisdictions under increased monitoring – the ‘grey list’ – in October 2021, and was subsequently removed by the European Commission from its EU List of High-Risk Third Countries – the EU Blacklist – in January 2022.
Although Mauritius no longer has any strategic deficiencies in its anti-money laundering and combatting the financing of terrorism (AML/CFT) framework, Dr Padayachy said: “We must continue to remain at par with the highest levels of international standards and best practices. We will therefore:
- Undertake a National Risk Assessment of money laundering and terrorism financing risks with the assistance of the World Bank.
- Introduce a new set of legislative amendments to reinforce the existing AML/CFT legal framework and a Whistleblowing Act to sustain the fight against corruption.
- Commission an independent assessment of the effectiveness of our AML/CFT system ahead of the ESAAMLG (Eastern & Southern Africa Anti-Money Laundering Group) mutual evaluation in 2025.”
To further consolidate the position of the Mauritius International Financial Centre, he said, the government is to extend the scope of the Variable Capital Companies to allow their use for family offices and wealth management, introduce a new framework to support the licensing and operation of Electronic Money Institutions (EMIs), introduce a Wealth Manager and Family Officer licence under Private Banking, and increase the promotion and marketing budget of the Economic Development Board by MUR100 million.
In line with the sustainability agenda and to promote the greening of the Mauritian economy, the government also plans to extend the exemption of interest income derived from bonds to finance renewable energy projects to all sustainable projects and the Bank of Mauritius will develop a Carbon Trading framework for both blue and green credits.
To further protect depositors, the Bank of Mauritius will operationalise the Mauritius Deposit Insurance Scheme and the Mauritius Deposit Insurance Company. The Digital Rupee will be rolled out in November this year on a pilot basis.
The government said the Mauritius Revenue Authority (MRA) would not seek to recover tax owed by a cell of a protected cell company by having recourse to assets of other cells or non-cellular assets of the protected cell company. Likewise, the MRA would treat each sub-fund or special purpose vehicle of a variable capital company as a separate entity for the purpose of recovery of tax.
The partial exemption granted in respect of interest earned by a Collective Investment Scheme or a Closed End Fund established in Mauritius is to be increased from 80% to 95%, while interest income derived from bonds, debentures or sukuks issued by an overseas entity to finance renewable energy projects – ‘Green Bonds’ – approved by the Director-General of the Mauritius Revenue Authority (MRA) will be exempted.
In respect of the registration of a transfer of shares, the Registrar-General’s Department is to introduce amendments as follows:
- For transfer of shares exceeding Rs 200,000 in value and requiring a supporting certificate from a professional accountant, the duty/taxes will be levied either on the value declared in the deed of transfer or in the certificate, whichever is the higher.
- When a person is acquiring more than 20% of the share capital in a company and an option has been made to be taxed on the value of shares transferred, a description of immovable property held in the company together with a site plan should be given at time of registration of the deed of transfer.
- The process of objection following an assessment on value of shares transferred will apply equally to the transferee and transferor if the latter is subject to land transfer tax on the transaction.
Other areas of significance addressed in the Budget Speech are as follows.
The Companies Act is to be amended to:
- Restrict the appointment of new directors within one month from the date of resignation or death of the last remaining director.
- Extend the timeline for a company to send its annual report to shareholders from 14 days to 21 days before the annual meeting.
- Enable the electronic distribution of annual reports and financial statements, with the possibility of shareholders requesting a hard copy.
- Clarify that the service address of a company has to be in Mauritius.
The Virtual Asset and Initial Token Offering Services Act
The Virtual Asset and Initial Token Offering Services Act is to be amended to:
- Allow a virtual asset custodian to hold custody of securities tokens.
- Empower the FSC to make rules for setting up a virtual asset register on virtual asset service providers.
- Premium Investor Scheme – The Scheme will be extended to cover investors taking over or acquiring the whole or part of a government undertaking, including by way of acquisition of shares in a government-owned company in order to benefit from negotiable incentives.
- Sale of Serviced Land – The promoter of a project under the Smart City Scheme or Property Development Scheme (PDS) is presently allowed to sell one plot of serviced land not exceeding 2,100 m2 to a non-citizen holder of an Occupation Permit, Permanent Residence Permit or a Residence Permit.
The time limit will be extended for another period of two years up to 30 June 2026 instead 30 June 2024. The conditions in relation to the time limit to complete construction of a residential building and the maximum land area of serviced land for sale in a project will continue to apply.
Immigration Act and Non-Citizens (Property Restriction) Act
- Relaxation of property acquisition by non-citizens outside the Smart City and PDS Schemes in Mauritius – Foreign nationals who are the main holder of a Residence Permit or Occupation Permit will now be permitted to purchase a single residential property in Mauritius outside the pre-established schemes – Smart City and PDS – under the following conditions: the price of the property must exceed USD500,000 and the area must not exceed 1.25 acres. The transaction will be subject to the payment of an additional registration duty of 10%.
- Acquisition of Property in a PDS Project relating to Senior Living – The Immigration Act will be amended to grant a residence permit to a retired non-citizen and his/her family on the acquisition of a property in a PDS project relating to senior living provided that the acquisition price exceeds USD200,000 and the non-citizen is aged above 50 years old. The status of resident will remain valid for as long as the buyer holds the property. This amendment will be backdated to 27 April 2019, which was the date that the PDS was amended to include construction of purpose-built building or bringing an existing building under the Scheme targeting senior citizens.
- Sustainable City Scheme – The Non-Citizens (Property Restriction) Act will be amended to allow non-citizens to acquire residential property in a ‘sustainable city’ in the same way as for an acquisition under the Smart City Scheme.
The Immigration Act will be amended to allow a non-citizen and his/her family to be granted a residence permit on the acquisition of property of a minimum price of USD375,000 under the Sustainable City Scheme. The status of resident will remain valid for as long as the buyer holds the property.
“Without the opening of our economy to foreign talents, we will not be able to sustain high levels of growth and develop new economic sectors,” said Dr Padayachy. “We are engaging on a major reform of our migration policy.”
The occupation permit will be streamlined as follows:
- The threshold for occupation permit for professionals will be reduced to MUR30,000.
- An applicant for an occupation permit will be allowed a business visa of 120 days without having to leave Mauritius.
- Obtaining an occupation permit will no longer be conditional on having a local bank account.
- The Young Professional Occupation Permit will be opened to all fields of study.
- A ‘silent consent’ provision of four weeks will be introduced for registration of foreign professionals with professional bodies.
The process for obtaining a work permit will also be streamlined as follows:
- Work permit applications will be made solely on the National e-licensing platform.
- A ‘silent consent’ provision of four weeks is being introduced for work permits applications.
- A new three-tier system will be introduced allowing companies with a good track record to benefit from a streamlined process to recruit foreign labour under a work permit.
- The ratio of foreign to local employees is being removed for specific sectors.
- Non-citizens on a tourist or business visa will be allowed to apply for a work permit.
Improving Doing Business
- B-Ready Coordination Committee – A ‘B-Ready Coordination Committee’ will be set up under the chairmanship of the Minister of Finance Economic Planning & Development to coordinate and ensure timely implementation of reforms proposed under the new framework of the World Bank in respect of the ease of doing business.
- Unique Identification Number – The Economic Development Board (EDB), Corporate and Business Registration Department and the MRA will work towards the implementation of a unique identification number, which will be used across all government agencies, for each business and company.
- National Contact Point – To be established under the EDB to promote Responsible Business Conduct and handling cases as a non-judicial grievance mechanism.
- Retired Non-citizen Bank Account Requirements – Retired non-citizens applying for residence Permit will not be required, in the initial stage, to open a local bank account. Instead, a certified bank statement from the applicant’s country of origin or residence showing proof of funds will be accepted together with a written undertaking to open a local bank account within two months.
- Work Permit – A work permit application will be deemed to have been approved and an electronic work permit certificate will be issued by the National Electronic Licensing System (NELS) if no response has been obtained from Ministry of Labour, Human Resource Development and Training within four weeks of the date of application.
- Initial investment requirement of USD50,000 for investors and USD35,000 for self-employed will be exempted at the time of issuance of permits. They will be required to show evidence of transfer of funds within four weeks of issuance of permits and post monitoring will be carried out.
Environmental, Social and Governance (ESG)
ESG-related projects will be included under the Premium Investor Certificate Scheme to position Mauritius better as an ESG-rated investment destination platform, supporting Climate-Smart Development in Africa, and encouraging potential investors and companies to adopt climate-smart solutions for their forthcoming projects,
Financial Intelligence and Anti-Money Laundering Act (FIAMLA)
The FIAMLA will be amended to clarify that entities such as Fintech Service Provider, reinsurance companies and brokers, travel insurance, health insurance, actuarial services, credit rating agency and insurance salesperson do not fall under the scope of the FIAMLA.
Financial Services Act
The Financial Services Act will be amended to:
- Define ‘AML/CFT’, ‘AML/CFT legislation’ and ‘administrative penalty’.
- Specifically empower the Financial Service Commission (FSC) to take enforcement actions in case of breach of AML/CFT legislation.
- Provide that the FSC can enter into arrangements and extend assistance to a foreign supervisory institution if that institution satisfies relevant confidentiality requirements imposed by the FSC.
- Require moneylenders to comply with any requirement of the FSC instead of prudential requirements.
- Align sanctions for non-payment of administrative penalties with that of non-payment of licence fees.
- Provide for the delegation of the FSC chief executive’s power to issue directions for the purpose of an investigation.
- Provide that licensees will be under an obligation to submit independent compliance reports to the FSC.
- include breach of the AML/CFT legislation as a ground for referral to the Enforcement Committee.
- Enhance the role of Management Companies with respect to ensuring compliance of their clients with relevant laws.
- Clarify that the issuance of a certificate of good standing is also applicable to Authorised Companies.
- Provide for the electronic filing of documents by licensees.
- Provide that recovery of annual fees and late charges due to the FSC will not be time barred to enhance recovery capacity of the FSC.
- Empower the FSC to make rules on obligations and responsibilities of holders of a Management Licence.