BUDGET 2021-2022

Budget 2021-22

Does the answer lie in the five year investment program?

The second budget by Dr, the Honourable Renganaden Padayachy was delivered in an even more arid economic environment than last year.  On the international front, despite the world economy expected to grow at 6% for 2021, the nth wave of COVID-19 across various parts of the world and continued quasi border lock down continue to generate significant uncertainty and severely impact our export and tourism led economy. 

Whilst the phased opening of the Mauritian borders has today been announced as from 15th July 2021 (subject to restrictions), the vaccination campaign and achievement of herd immunity remains a condition sine qua non for a sustainable reboot of the economy.  In addition, the state of  public finances remains an area of concern, public debt is at 95% of GDP, with the current year budget deficit announced to be 3% of GDP, and the recent IMF report effectively constricting the Government’s access to the reserves of the Bank of Mauritius.

An ambitious Public Sector Investor Programme, is once again at the heart of this budget with investments of close to US$4,5Bn expected over the next five fiscal years. A project implementation and monitoring agency, will focus on execution with a target of 80% deployment over the next three years. Economic sectors will attract 53% of these investments with the lion’s share going to roads, and land transport infrastructure.  The capital investment in the development of green energy industry (around US$400m) will be backed by an array of incentives - the target being for green sources to contribute 60% of the country’s energy needs.  Within the social sector component, the investment in environment is expected to be almost US$500m.  Sustainability is indeed at the top table.

The key priority for the financial services sector remains the removal from the FATF list of jurisdictions under increased monitoring and the relevant regulatory framework are being amended to reinforce adherence to AML/CFT. The  tax regime has remained unchanged, coherent and consistent with a number of measures aimed at attracting 50,000 expatriates in the next 12 months.  The Economic Development Board becoming an increasingly empowered clog in the “ease of doing business” machinery.

If all goes to plan, 2021/22 should result in a GDP growth of 9%, budget deficit at 5% of GDP, and the public sector debt trending downwards to 91%.


Mauritius performance at a glance


Key measures - Live, work and doing business

Live and work

Occupation permits

• Extension of validity   period   for   an   Occupation   Permit   for Professionals from 3 years to 10 years.
• Exemption to apply for an Occupation or work permit for Spouses  of  OP  holders  wishing  to  invest  or  work  in  Mauritius.
• The maximum age limit of 24 years for dependent will be waived.
• Introduction of a  new  category  under  the Occupation Permit Regime, 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 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.
• A Premium Visa Scheme has been introduced with the objective to encourage eligible foreigners for long stay in Mauritius for a period of at least one year with the possibility of renewal with attractive incentives and effective as from 1 November 2020.
• A  non-citizen  who purchases  or  otherwise  acquires  an apartment  used,  or  available  for  use,  as  residence,  in a building of at least 2 floors above ground floor, provided the purchase price is not less than USD375,000 will be issued with a residence permit, including for his dependent, and exempted from the requirement of a work or occupation permit.
• A non-citizen will be eligible for an Occupation Permit irrespective of his visa category when he arrived in Mauritius.

Permanent Residence Permit

(a)       Holders of a 10-Year Permanent Residence Permit will have the validity automatically extended to cover a 20-Year period.
(b)       Holders of a Permanent Residence Permit will be able to renew their permits and they will be given the flexibility to switch category between investor, professional and retired.

Work Permit

The Work Permit will be extended allowing Mauritians and non-citizen residents to bring foreign carers and maids to work in Mauritius

Mauritius as a destination of choice for retirement

Introduction of a special desk  and dedicated portal for foreign retirees providing practical information on accommodation facilities, cultural and leisure activities, and healthcare services; amongst others.

Ease of doing business

To facilitate even more the ease of doing business in Mauritius, The Economic Development Board will set up the following commissions to keep  abreast  of  all  business  and  economic developments, issues and opportunities in:

(a)   Trade and Business Facilitation
(b)   Export Development
(c)   Investment
(d)   Sectoral Development

Creation of new sector for growth

In view of the increasing demand in energy, various incentive scheme will be provided to individuals and companies looking at investing in Green Energy.

Biotechnology and Pharmaceutical Industry

Private companies who will be engaged in the construction of their purpose-built factories for manufacturing of pharmaceutical products and medical devices as well as for clinical and pre-clinical trials will be able to benefit from exemption on:

(a)  Registration duty and land transfer tax;
(b)   Land conversion tax; and
(c)   VAT on construction.

All companies engaged in the manufacture of pharmaceuticals and medical devices will be eligible to a premium investor certificate. Biotechnology and pharmaceutical companies will be allowed a full tax credit on the costs of acquisition of patents.

Companies   engaged   in   the   medical,   biotechnology   and pharmaceutical sector will be taxed at 3% instead of 15%.

Invitation to pharmaceutical investors

Government will provide a seed capital of Rs 1 billion to the Mauritius Institute of Biotechnology for the setting up of a manufacturing plant for the local production of COVID-19 vaccines and other pharmaceutical products

Trade Agreements

With the coming into force of four trade agreements, the CECPA with India, the China FTA, the UK-ESA Agreement and the   African  Continental   FTA   opens   new   windows   of opportunities for Mauritian businesses.

Tax Holiday / Partial exemption
Asset/Fund Manager

A 5-year tax holiday is granted on emoluments of an asset manager, a fund manager or asset and fund manager who manages an asset base of not less than USD 100 million and who   has   been   issued   with   a   certificate   on   or   after 1 September 2016.

Holders of a certificate issued on or after 1 September 2016 will be exempted from tax on their emoluments for an additional 5 years while new certificate holders will be eligible to a tax holiday of 10 years. In addition, the threshold of USD 100 million in respect of asset base being managed by an Asset/Fund Manager will be reduced to USD 50 million.

Investment Dealers

The scope of the partial exemption tax regime will be broadened to cover investment dealers and other type of leasing activities.

Our comments

These measures demonstrate the drive to open up Mauritius as a destination of choice to work and settle for investors, professionals and retirees with the settlement process streamlined through the Economic Development Board (“EDB”).


Commitment to FATF

FATF list of jurisdictions under increased monitoring (“FATF list”) 
Mauritius is fully committed and is taking a number of initiatives be it from a regulatory, supervisory and law enforcement perspective, for a swift exit from the FATF list.
The measures announced by the Government include the following:
• Relevant laws have been amended to be in line with the FATF recommendations;
• Creation of a Financial Crime Divisions which will deal with financial crime cases under the purview of the Supreme and Intermediate Court;
• Putting into place of an AML/CFT core group to monitor the implementation of the recommendations of the FATF;
• Establishment of a Financial Crime Commission which shall be responsible to combat white collar crimes, fraud and financial crimes and more importantly to provide the synergy between the various law enforcement and intelligence gathering agencies;
• Qualified trustee shall fall under the definition of a Financial Institution under the FIAMLA;

Other relevant amendments impacting the Financial Services sector
Companies Act:
A public company having not more than 50 shareholders may be converted into a private company.

Financial Services Act:
Issue of shares of less than 5% in a Licensee shall not require the prior approval of the FSC unless resulting in a change of control.

Disclaimer

The information presented does not constitute and should not be construed as accounting, legal or tax advice. It is intended to provide an overview. We recommend that your accounting, legal or tax expert be consulted for any specific advice which you may require in light thereof.

The source of information is based primarily on the announcements made by the Minister of Finance, Economic Planning and Development in his budget speech. The measures announced may however change upon enactment of the Finance Act in due course.