“To dare and to care” was the overarching theme of the Budget for 2023-24, where the Finance Minister presented a socially focused budget for the second consecutive year.
The Minister began on the optimistic note that in 2022 the Mauritian economy had grown at its fastest pace in over 35 years, and he declared that the island had “turned the page on the COVID-19 economic downturn”. He highlighted that the Budget was focused on the three pillars of strengthening the foundations of the economy, continuing the transformation of Mauritius into a sustainable economy and “building the future we deserve”.
New measures were announced to enhance the competitive edge of the Mauritius International Financial Centre. The position of Mauritius as a platform for debt financing will receive a significant boost as the partial exemption on debt funds will increase from 80% to 95%, which means that Mauritius will emerge as a highly tax efficient jurisdiction for debt.
The position of Mauritius as a hub for wealth management is also set to be reinforced, with the extension of the scope of Variable Capital Companies to allow their use for family offices and wealth management, as well as the introduction of a Wealth Manager and Family Officer licence under Private Banking.
On anti-money laundering and combating terrorism financing (AML/CFT) front, where-in Mauritius has now achieved the perfect score of 40 out of 40 on the Financial Action Task Force (FATF) Recommendations, the Minister enumerated a series of measures to remain at par with the highest levels of international standards and best practices. These include undertaking a National Risk Assessment of money laundering and terrorism financing risks with the assistance of the World Bank and introducing amendments to reinforce the existing AML/CFT legal framework and a Whistleblowing Act to sustain the fight against corruption. He also pledged to commission an independent assessment of the effectiveness of the country’s AML/CFT system ahead of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) mutual evaluation in 2025.
Innovation remains a watchword for Mauritius, and the Minister confirmed recent comments made by the Governor of the central bank that the Digital Rupee will be rolled out this November on a pilot basis. A new framework to support the licensing and operation of Electronic Money Institutions was also announced, along with measures to encourage the adoption of e-signatures.
In terms of ease of doing business, companies will be provided with a unique identification number, be it for company, business registration, VAT, tax or employee number. In a welcome move, the Tax Arrears Settlement Scheme (TASS) is being extended for a period of one year, with a full waiver of penalties.
When it comes to the green agenda, the Minister pledged that “we aim to create a carbon neutral economy”. He stated that, in line with the Government’s sustainability agenda and to promote the greening of the economy, the exemption of interest income derived from bonds to finance renewable energy projects is to be extended to all sustainable projects, while the Bank of Mauritius will develop a Carbon Trading framework for both blue and green credits.
In response to recent calls from the industry to address labour shortages across the economy, the Minister announced that the Government was engaging on a “major reform” of its migration policy to attract foreign talent. Measures have been announced to streamline and simplify issuance of occupation and work permits, including the adoption of a ‘silent is consent’ principle to certain categories.
Social measures were much awaited by the general population which has been hard hit by rising inflation and high petrol prices in recent months. The Minister announced a raft of pension increases and wider support measures to the vulnerable sections, along with a radical reform of the income tax system to put it on a progressive footing, while abolishing the solidarity levy, which had been a deterrent in attracting highly qualified senior talent to the island.
Overall, the Budget aims to strike the right balance between doing enough to ease the economic situation of the most vulnerable and enhancing the position of the island as a competitive jurisdiction and attractive destination to work and live.