Key Takeaways from the Mauritius National Budget

As expected, that the budget will need to positively adjust the purchasing power of the nation following the recent soaring prices of domestic products led by the unprecedented devaluation of the rupee against dollar, the Russia-Ukraine invasion, supply chain disruptions and the recent lockdown in China.

The finance minister has also made some bold announcements to stimulate domestic productions to respond any food crisis and to increase Mauritius’ exportation to regional and international markets. The Budget has provided some interesting initiatives for a sustainability and environment perspective to address climate change and reduce dependency on coal in the electricity production.

Measures most relevant to the financial services sector are highlighted below:

Financial Services:

• Introduction of a domestic minimum top-up tax on resident companies, of large multinationals having a global annual revenue of a minimum of EUR750m, to ensure they are taxed at a minimum of 15%;
• Adapting the legislative framework for the convergence of the domestic and global business regime;
• Renewal of the one-year graduate training programme on AML by the BOM and FSC;
• Minimum portfolio of USD5m per management family office;
• Holders of Global Headquarters Administration license will be provided work and residence permits for 5 executives and the latter’s dependents;
• Launching of a regional Renminbi Clearing Centre by the Bank of Mauritius and the Bank of China;
• Collaboration between the Bank of Mauritius and the National Payments Corporation of India for the issuance of the 'RuPay' cards and Indian QR Code in Mauritius;
• Bank of Mauritius to facilitate opening of a bank account for individuals and businesses within one week;
• FIAMLA to be amended to include combatting of proliferation financing; and
• Establishment of a Financial Crime Commission for effective coordination in the fight against financial crime.

Sustainability measures:

• Duty free on hybrid and electric vehicles as from 1 July 2022;
• Carbon Credit trading framework to be prepared; and
• ESG framework to be developed for sustainable bond issuance.

Other measures of note:

• Monthly support of Rs 15,000 for the first year of employment for 10,000 young people;
• Income Tax Act amended to clarify that foreign employers of holders of Premium Visa will not be subject to corporate tax in Mauritius as a result of work performed by their employees;
• Acquisition of residential property of a minimum of USD350,000 will be permitted by Residence Permits holders outside the existing schemes, provided that 10% contribution is made to the Solidarity Fund
• International arrangements henceforth possible for alternative dispute resolution for resolving cross-border tax disputes and implementing internationally agreed standards to prevent base erosion and profit shifting;
• Residential property acquired by more than one non-citizen under ‘fractional ownership’ will be eligible to apply for the status of residency provided that the investment by each non-citizen exceeds USD375,000;
• Work Permit Committee chaired by the Prime Minister to be set up to expedite issuance of work permits;
• The re-introduction of the Tax Arrears Settlement Scheme (TASS) providing for a waiver of penalties and interest on outstanding tax bills if they are paid in full by 31 March 2023 and application is made on or before 31 December 2022. This scheme has been extended to taxpayers having assessment pending at the Assessment Review Committee or at the Court;
• Increase in tax deduction at source (TDS) – a rise of 2% on TDS charged to professionals is noted and an increase of 2.5% on rent paid to resident has been proposed. TDS will now apply as well to consultancy fees, security and cleaning services, pest management services and fees made by insurance companies to motor surveyors and mechanics for repairs of motor vehicles of policy holders;
• Implementation of the BEPS minimum standards to address the erosion of Mauritius’ tax base;
• The threshold to avail of the Alternative Tax Dispute Resolution panel facility has been reduced from Rs 10M to Rs 5M; and
• Interesting proposals have been made for a timely resolution of cases pending the Assessment Review Committee. The arrangement of a mediation meeting led by the chairperson or vice person is encouraged. Decisions in some specific cases may be delivered on the same.

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