Mauritius Budget 2021-22 Highlights - Temple Corporate ...

Mauritius
Budget 2021-22
Highlights

Contents
03-05   Temple Accounting & Tax Services View

06-08   Budget Financials & Economic Outlook

09-12   Global Business & Regulatory

13-14   Direct Income Taxation

15-21   Sector Incentives

22-26   Immigration & Residency

27-30   Closing Comments & Disclaimer

Temple Accounting &
Tax Services View
(TACTS)

TACTS View
The Mauritius Finance Budget 2021-22 Speech made by the Hon. Minister of
Finance earlier this evening provides for the vision of the Government in as far as
balancing social spending and commitments against collection of revenues, re-
boosting of the economy and preservation of public wealth under the continued
clouds of the pandemic.

The Minister has based the Mauritius Strategy on 3 salient features:

• Recovery:        Job preservation and creation

• Revival:         Forecasting a GDP growth of 6% for the world and 9% for the
                   country

• Resilience: Unemployment kept at 9.2% for 2021, and forecasted to go
                    under 4% in 2022

TACTS View
The Minister has laid emphasis on public service delivery, via multi-level
spending of Government projects.

This will help move the local economy and job market and propel additional
consumption. Stronger focus on overall reform and public care have been the
pillars of this budget, without any major changes to the tax regime. This is a
welcome relief for all, including industry and enterprise.

Budget Financials &
Economic Outlook

Budget Macro Measures & Economic Outlook
The budget further lays emphasis on
• Investment Boosting
• New Economic architecture
• Restoring confidence

A series of measures have been announced to increase Government spending,
and provision of incentives for SMEs as well as for larger employers. These
actions will also act as a stepping stone for the creation of new jobs within
both the public and private sector.

With circa 5,000 job vacancies anticipated to be filled in the public sector over
this coming financial year and increasing to 10,000 by 2024, the Government
is seeking to invest in the reskilling and retraining of those sectors having
suffered from layoffs with the intent of absorbing part of those resources in
both public and private sector.

This will provide individual relief and maintenance of social and economic
harmony. We welcome these positive steps lead by the government.

Budget Financials & Economic Outlook
A proposed public expenditure of MUR 65 Billion to be spent on housing,
public infrastructure, environment, flash floods management, amongst others,
will help boost construction and real estate. In turn, this should lead to
expansion of other sectors of the economy, and increase overall consumption
and economic growth.

The Government, taking the lead under the backdrop of COVID 19 distress, is
laudable and a sign of confidence for private entrepreneurs and foreign
investors.

We forecast an increased foreign direct investment (FDI) and economic
activity in real estate, education, healthcare, and hospitality, as a result of the
various measures announced.

Increased FDI will also help stabilize the Mauritian Rupee and boost the
FOREX reserves.

Global Business &
Regulatory

Global Business & Regulatory
INSOLVENCY ACT
There will be proposed developments to this area to align itself with the
updated insolvency practices since 2009 with a particular focus on
preservation of businesses in the backdrop of the pandemic.

Anti-Money Laundering/Combating Finance of Terrorism
The AML/CFT Core Group is to be established under the Financial Intelligence
Anti Money Laundering Act with the intent of aligning the country to the OECD
Guidelines and offer greater security and monitoring of transactions.

The Insolvency Act will also be amended to cause a Liquidator will now need
to disclose his duties and obligations to the FSC under any arrangement or
agreement for exchange of information, thus catering for an extra layer of
business protection.

Global Business & Regulatory
BANKING SECTOR
The Bank of Mauritius will introduce a new guideline on the usage of
Application Programming Interface, to support open banking initiatives.

Additionally, the Budget 2021-22 seeks to empower the Bank of Mauritius to
set up a centralised bank account holders register as a further step to
investigate serious financial crimes.

In our view, this will enhance the country chances of removal for the grey
listing and create further confidence in the Mauritius IFC.

Global Business & Regulatory
FURTHER TAX INCENTIVES
The scope of the partial exemption tax regime will be expanded to include
investment dealer and other leasing activities.

The tax holiday scheme is also extended to Family Offices, Fund Managers
and Asset Manager from 5 to 10 years. Family offices will no longer require a
Global Business License.

In our opinion, these are welcome additions to the already well-established
global business regime that, upon recommendations of the OECD, aligned itself
to global tax practices, and maintaining it’s status as a legitimate and viable
financial services center.

International Banks will be allowed to set up regional and local branches
under revised guidelines from the Bank of Mauritius, allowing for greater
banking options for international investors, and increasing liquidity in the
fiscal system.

Direct Income
Taxation

Direct Income Taxation
CORPORATE AND PERSONAL INCOME TAX
The Government’s maintenance of the overall tax regime as such, is a step of
great relief and will definitely provide a lot of confidence to employers for
continued investments and preservation of employment.

There was an expectation of increased taxation, which has now been put to
rest, to the good fortune of employers, investors and business houses.

This is especially laudable when there is global furor for increased taxation to
fund for the COVID related economic slowdown and to fund public spending.

We laud the Government for maintaining the already attractive tax regime at
all levels.

Personal income tax payers will also benefit from the status quo.

Sector Incentives
Property and Real Estate/Infra/ Pharma/
Insurance/Hospitality/Other

Sector Incentives
•   Announcement of MUR 8 Billion for projects across the island
•   A MUR 5 Billion Fund is allocated under a new setting of an Industrial and
    Financial Institution whish , amongst other areas will look at:
     • Leasing facilities at a 2% rate of interest, spread over 9 years
     • Interest rates reduced from 3.1 % to 2.1% for under MUR 50 Million
     • Premium Investor Certificate for projects over MUR 500 Million in
        investment
     • EDB will set up various facilitating sections for further ease of
        business

ENERGY
• Moving from coal to greener resources
• Investment in CEB infrastructure
• DBM loan at 2% interest rate for solar investment for homes
• Removal of 5% duty on electric vans for up to 180 K watts
• Subsidy on buses raised from MUR 1 M to MUR 1.2 M and MUR 1.5 M for
  small and large buses respectively

Sector Incentives
TOURISM

•   Partial Opening of borders expected on 15th July
•   Full opening from 1st October for those with negative PCR
•   Mauritius Tourism Promotion Authority (MTPA) to get MUR 420 M for
    destination marketing
•   Wage Assistance Scheme extended up to September 2021.
•   Invest Hotel Scheme now increased to 80% and with owner allowed to say
    for 6 months.
•   Villas under Invest Hotel Scheme can now have a minimum investment of
    USD 375K

The above schemes help in reducing the debt of the hospitality industry by way
of FDI and local investment in the Invest Hotel Scheme. The very high gearing
will hopefully get reduced and provide incentive for future hotel development
projects, needed to achieve the target of 2 M tourist arrivals by 2025.

Sector Incentives
Pharma and BioTech

•   Exemption on registration and land transfer tax
•   Premium Investor Certificate
•   Seed Capital of MUR 1 B will be allocated to the Mauritius Institute of Bio-
    technology for setting up of a manufacturing plant for COVID 19 vaccines
    and other products.

This governmental lead into combatting the fight against COVID 19 is very
welcome, which will create self-sufficiency in drug manufacture, boost
innovation, and create export opportunities for the region.

Furthermore, corporate tax for this sector has now been revised to 3% instead
of 15%, thus providing further incentive for investment and expansion.

There is also a full tax credit for cost of acquisition of patents to make generic
drugs and medication, another solid support system from the Government.

Further benefits include exemption from land transfer tax, registration duty,
land conversion tax and VAT on construction.

Sector Incentives
Construction and Real Estate

•   MUR 2 Billion for purchase of private land into sovereign land bank
•   Home loan refund of 5% for up to MUR 500K
•   Exemption on registration duty for first MUR 5 Million purchase by first
    time buyer
•   Mortgage scheme to cover 100% loan for individual home
    builders/owners

Housing and other construction activity are empirically the locomotives to any
economic growth and the budget measure are a step in the right direction,
incentivizing the buyer as well as getting the liquidity with the banks to be
rolled into the marketplace.

Sector Incentives
Others

•   With 4 new Free Trade Agreements: AFCTA, US-UK Agreement, CECPA and
    Mauritius China FTA, implementation of the same will be now handled
    from a one-stop desk at the EDB
•   Freight subsidy scheme extended until 2022
•   Anchorage and other port due reduced to 25% for first 24 hours and 50 %
    for following 24 hours.
•   Third-party free port developers can lease space for non-freeport
    companies

Mauritius is uniquely placed to remain the Africa gateway for both China and
India, as well as align itself with pan-African trade, covering over 70% of the
world population. The involvement of EDB for ease of business under the
various FTAs will certainly help businesses from these FTA partners to
increase substantially, and this is again a welcome step.

Manufacturing companies exporting to Africa will benefit from double tax
deduction in select areas of research and development.

Sector Incentives
Others

•   No land transfer tax on student campus building
•   3 % CIT for private universities

The push to consolidate Mauritius as an education hub is further supported in
this Budget by exempting companies from land transfer tax for building of
student campuses.

Furthermore, corporate income tax for private universities with international
accreditation will only entail 3% tax, as against 15% previously.

Immigration &
Residency
Occupation Permit/Work Permit/Residency.

Immigration & Residency
Occupation Permit
Occupation permit will be reviewed as follows:
• Validity period for an Occupation Permit for Professionals will be extended
  from 3 years to 10 years in line with the investors, self-employed and
  retired non-citizens.
• Non-citizens holding an Occupation Permit as a Professional will be given
  flexibility to switch job without having to submit a new application
  provided that the minimum criteria are met.
• Non-citizens holding an Occupation Permit as a Self-Employed will be
  allowed to incorporate a one-man company and employ administrative
  staff.
• The criteria for Young Professional Occupation Permit will be reviewed and
  the list of qualifying services removed, with eligible students automatically
  qualifying for an extended 10-year Young Professional occupation permit
  post studies.

Immigration & Residency
Permanent Residence Permit
• Spouses of Occupation Permit holders wishing to invest or work in
  Mauritius will be exempted from applying for an OP or Work Permit.
• The maximum age limit of 24 years for dependants will be waived.
• A non-citizen may apply for an Occupation Permit irrespective of his or her
  visa category when he or she arrived (requirement for business visa is
  waived).
• The monthly salary for an OP for Professionals under the financial services
  sector will be brought down to MUR 30,000 limited to fund accounting and
  compliance services by a company licensed by the Financial Services
  Commission, and a minimum of 3 years’ work experience as a pre-requisite
  for application.
• A new category is being introduced under the Occupation Regime. A 10-
  year Family Occupation Permit is being introduced for those contributing
  USD 250 000 to the Covid-19 Projects Development Fund.

Immigration & Residency
Work Permit

Permanent Residence Permit
• Holders of a 10-year Permanent Residence Permit will have it automatically
  extended to 20 years.
• Holders of a 20-year Permanent Residence Permit will be able to renew
  their permits and will be given flexibility to switch between Investor,
  Professional and Retired Non-Citizen.

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

Immigration & Residency
Work Permit

Premium Investor Certificate

• Minimum investment MUR 500 Million (excluding pharmaceuticals)
• Incentives to be negotiated with EDB, recommended by Technical
  Committee and approved by the Minister of Finance on land and buildings,
  infrastructure and public facilities, fiscal incentives, other taxes, duties,
  fees, charges and levies, labour requirements (including foreign labour),
  permits & licenses and training grants

The Government has taken a favourable approach by acknowledging the
current shortcomings in positioning Mauritius as a long-term, family friendly
jurisdiction. This is evident in the proposed extension of the right of spouses
of OP holders to freely invest and/or work as well as the waiver of the
dependent maximum age limit, a longstanding contentious issue of concern
for non-citizen families seeking an inclusive destination conducive to long
term settlement.

Closing Comments

Closing Comments
The proposed Mauritius Finance Budget 2021-22 is a well balanced act by the Hon.
Minister of Finance, maintaining the government’s continued support to the distressed
sectors, progressing with its socio-economic agenda, and happily creating nearly 10,000
new jobs with government.

The overall maintenance of the tax regime from last year at the start of the pandemic,
and with this year bearing further brunt of the disease, is testimony to the government’s
mature approach in not burdening the taxpayers (individuals as well as companies)
further. This was a fear that has been put to rest and will certainly add to the confidence
of investors and ascertain job protection and employment regeneration.

Further incentives for global immigration and investment will also add to greater flow
of trade, stronger forex reserves and a strengthened Mauritian Rupee, and large social
exposure and harmony.

From a philosophical perspective, this budget could have been better, but it could also
have been a lot worse! Maintaining status quo on taxation whilst not cutting down on
public expenditure and reform is a bold and progressive move for the overall
betterment of the Mauritian economy.

Author

  Aditi Boolell               Esmarie Swanepoel                   Parwez Nayek
         Director            Lead Advisory: Expat & Immigration       Team Leader
  a.boolell@templegroup.mu        e.swanepoel@templegroup.mu      p.nayek@templegroup.mu

DISCLAIMER
•   This document is submitted to the Clients for the purpose of providing a general overview of the regulatory,
    corporate and tax regime as announced in the Mauritius Budget Speech 2021-22.

•   This document, the information contained herein, and all enclosed documents and annexes are the property
    of the TACTs. The sharing of this document is authorized solely to the recipient of the document/s.

•   The synopsis, comments, opinions, and the document/s content as a whole, or in part, do not purport or
    constitute a legally binding opinion, and users are advised to engage with TACTs for specific queries and
    issues.

•   TACTs bears no responsibility as to the interpretation made and actions engaged by anyone on the basis of
    the document/s, as further avers that the provisions and statements in the Mauritius Budget Speech 2021-
    22 are subject to changes and final enactment.

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