Mauritius could become a “Rs 1 trillion economy by 2030,” asserted the Finance Minister in presenting the National Budget 2024-25 on 7 June, if the right business, economic and labour market conditions are put in place.
In delivering his pre-election Budget speech to the National Assembly, Dr. the Hon. Renganaden Padayachy focused on three key pillars, namely fostering economic dynamism, working towards a sustainable and inclusive Mauritius and building our future, with the Minister claiming that “tomorrow is ours”.
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Enhancing the ease of doing business was a key component of the economic dynamism agenda, with measures to be introduced to make more licences available electronically and on the national e-licensing system. In a welcome move, it was announced that the Financial Services Commission (FSC) would streamline the process for its licences and permits to ensure they’re granted within 10 working days, if all requirements are met.
Regarding the Mauritius IFC, it was announced that the blueprint for the financial sector, published in 2018, would be reviewed in the light of new opportunities, challenges and threats. The funds regime will be reviewed to enhance the attractiveness of the jurisdiction. For captive insurers, it was clarified that the eight year income tax holiday will apply as from the date the company has started its activities.
In response to growing calls from the financial sector for the Government to tackle the ‘brain drain’, the Budget included measures to attract foreign talents to the island at both junior and senior levels. The threshold for Occupation Permits for professionals has been lowered from MUR 30,000 to MUR 22,500, which may make it more financially viable for companies to offer jobs to foreign students upon their graduation in Mauritius. For senior professionals, the Minister announced the introduction of a 10-year expert Occupation Permit to attract foreign talents in wealth management, family office, virtual assets and virtual tokens.
Looking beyond the island’s borders, the Minister highlighted that the Government would explore the signature of a Strategic Partnership Agreement (SPA) with India and African countries. With the Minister simply commenting that the Government would further engage into discussions with the Indian authorities for the development of the financial sector, the industry did not receive the clarification it had been expecting.
With the Government being strongly committed to the innovation agenda, the Minister underlined that “the development and spread of Artificial Intelligence across the world offers vast opportunities for Mauritius”, with tax changes to stimulate growth. A company holding a robotic and artificial intelligence enabled advisory services licence issued by the FSC will be allowed to claim the 80% partial exemption on such income if it complies with the substance requirements. It was also mentioned that the investment tax credit of 15% over three years will be extended to cover both AI and patents.
In another welcome tax change, the exemption granted in respect of income derived from the sale of securities will be extended to cover the sale of virtual assets and virtual tokens to further enhance the competitiveness of the Mauritius IFC. To boost the island’s credentials in innovation, a blueprint for the development of Mauritius as a fintech hub in the region will be devised with the assistance of the United Nations Economic Commission for Africa, and the centralised e-KYC will be extended to the global business sector.
Besides the financial sector, the Minister highlighted a renewed focus on promoting exports to bolster economic growth. He pledged to provide a comprehensive set of measures to support our industrial base and boost the island’s export industry.
A new Corporate Climate Responsibility (CCR) levy, equivalent to 2% of the company’s profits was announced to support national initiatives to support the country’s national ecosystem and combat the effects of climate change. The Minister stated that companies with a turnover of less than MUR 50 million will be exempted from this levy, yet it is unclear if this will apply to global business companies.
It was announced that the FSC will be able to levy fees for post-licensing processes. The FSC will also increase the processing and annual fees payable by its licensees. In a more positive step, a Tax Arrears Settlement Scheme will be implemented up to June 2025, with a full waiver of interest and penalties.
Overall, it is a Budget which seeks to make Mauritius more open to the world on the one hand, in terms of attracting new talents and investments in innovative and dynamic sectors, while improving the social conditions of its local population on the other.
