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