09 June 2017

 
         

Is the Mauritian Government "Rising to the challenge of our ambitions"?


The 2017-2018 Budget Speech having for theme “Rising to the Challenge of our Ambitions’’ was presented by The Honourable Pravind Kumar Jugnauth, Prime Minister, Minister of finance and economic development yesterday Thursday 9 June 2017.

The Honourable Prime Minister in his opening speech elaborated on the fact that the Budget was based on continuity and his vision of a new era of development for the Mauritian economy which started with last year’s budget.

The key budgetary measures having an impact on the legal, tax and regulatory framework of Mauritius are as follows:

Banking

  • Amendment to the Companies Act to allow for Islamic Financial Institutions and Islamic Banks to adopt accounting standards issued by the Accounting and Auditing Organisation for Islamic Financial institution.

  • The minimum capital requirement of banks will be raised from Rs 200 million to Rs 400 million with a moratorium period of 2 years for existing banks.

  • Proposal to amend the Code Civil Mauricien and the Code de Commerce to allow the use of all movable assets as loan collaterals for SMEs and co-operatives.

Financial Services & Capital Markets

  • GBC1 companies will henceforth be required to fulfil at least two of the criteria established by the FSC to demonstrate substance. Whilst this is a positive move towards enforcing the position of Mauritius as a jurisdiction of substance, it is unlikely that this will be sufficient to meet the standards required by the BEPS (Base Erosion Profit Shifting) proposals issued by the OECD.

  • The Stock Exchange Commission will set up an international capital market for multi-currency bonds. This measure can be read in line with the increased substance requirements (see paragraph above), one of the criterias being a listing on a securities exchange licensed by the FSC.

  • The legal obligations on Special Purpose Funds will be aligned with those of GBC1 companies.

  • The FSC will set the rules for regulating the Fintech activities such as peer-to-peer lending and funding, as well as mobile wallet.

  • To position Mauritius as a capital raising platform, the requirements pertaining to a prospectus as set forth under the Securities Act 2005 and Securities (Public Offer) Rules 2007 will no longer be applicable for GBC 1 companies which are also listed in another jurisdiction. Only the requirements under the SEM Listing Rules will henceforth apply.

  • The Financial Reporting Act will be amended to provide that wholly owned subsidiaries need not comply with the National Code of Corporate Governance if its ultimate holding company is already complying with same.

Manufacturing

  • To encourage the development of new growth poles, new companies engaged in the manufacturing of pharmaceutical products, medical devices and high tech products will benefit from an 8 year income tax holiday.

  • Abolishment of Registration Duty and Land Transfer Tax on transfer of immovable property for the setting up of a business for high-tech manufacturing.

Agriculture

  • Registration Duty payable on leases of agricultural lands of up to 10 hectares will be waived.

  • Creation of a Food Processing Development Certificate to promote the importation of products such as maize, vanilla, cocoa, coconut and medicinal plants to be used as raw materials for processing and re-exports, including the refining of raw sugar.

Innovation & Technologies

  • Integration of the Industrial Property Office in the Mauritius Research and Innovation Council (MRIC).

  • Introduction of an Innovation Box Regime for Intellectual Property assets which are developed in Mauritius. New companies involved in innovation-driven activities will benefit from a tax holiday of 8 years on the income derived from the totality of Intellectual Property Assets.

  • The Data Protection Act will be amended to comply with the new EU data protection regulation which will come in force in May 2018.

Taxation

  • The tax regime for global business companies will be reformed to meet new international requirements. The Budget does not provide any detail on the content of this reform but it is expected that changes will need to be made to the current “deemed foreign tax credit” rules in order to bring the tax regime for global business companies in line with Action 5 of the BEPS proposals (which deals with harmful tax practices).

  • Interest income from debentures issued to finance renewable energy projects and which are approved by the MRA will be exempted from tax.

  • Individuals having chargeable income plus dividends in excess of Rs 3.5 million will be required to pay 5 per cent of the excess as a solidarity levy.

  • The Tax Arrears Payment Scheme is being re-introduced for another year with new so as to expedite collection of long outstanding arrears of tax.

  • Expeditious Dispute Resolution of Tax Scheme (EDRTS) will be re-introduced for another year for the settlement of disputes of less than Rs 10 million by allowing the MRA to review the assessed amount including penalties claimed from a taxpayer who could not lodge an objection, principally because of failure to pay the 30% or 10% of the amount assessed.

  • The conduct of cases at the Assessment Review Committee (“ARC”) will be revised. Written representations relating to income tax, VAT and gambling taxes accompanied by written statement of case and a witness statement will be allowed instead of hearing at ARC. In addition, cases are to be heard within 2 months from date of representation and decisions to be given within 4 weeks of hearing. It is hoped that this will significantly expedite the conduct of hearings at the ARC.

  • The Alternative Tax Dispute Resolution Panel, which is already in place since May 2017, will also be allowed to review cases involving PAYE, TDS and assessments under the Gambling Regulatory Authority Act.

  • The Income Tax Act will be amended to empower MRA to request from banks, insurance companies and non-bank deposit taking institutions, an Annual Statement of Financial Transactions in cases where a transaction by any person (individual, company, société, trust or succession) exceeds Rs 500,000 or if the aggregate amount of deposit in an income year exceeds Rs 4 million.

  • Companies will be required to submit to the MRA a list of individuals who have been paid in a year dividends exceeding Rs 100,000.

  • It will be mandatory for all companies to file their income tax returns and pay taxes to the MRA electronically. Likewise, an employer will be required to submit a PAYE return and remit tax withheld electronically.

Foreign Investment and Expatriates

  • The establishment of an Economic Development Board (EDB). The BOI, Enterprise Mauritius, the Financial Services Promotion Agency and the Mauritius Africa Fund will be integrated in the EDB. The EDB will also be the main business licensing agency in Mauritius-“no more office hopping to obtain a business license.”

  • A 10 year vision blueprint will be developed in collaboration with the EDB, BoM, FSC and stakeholders of the sector.

  • To facilitate the implementation of joint projects by Mauritian enterprises in Africa, the Mauritius-Africa Fund will establish a Business and Investment Platform for Africa (BIPA).

  • The Mauritius-Africa Fund (in relation to Ivory Coast), has secured access to land, on preferential terms, in the “Zone Franche de la Biotechnologie et des Technologies de l’Information et de la Communication” for Mauritian enterprises to undertake development projects.

  • To attract foreign investment, high tech machines and equipment brought by an investor from abroad will be considered as part of the minimum investment of USD 100,000 required to obtain an Occupation Permit.

  • Extension for the 8-year work permits policy for expatriate workers in the export-oriented enterprises to all manufacturing activities.

  • Issuance and renewal of work permits will be made within the reduced timeframe of 15 working days, instead of 40 working days.

  • Non-citizens acquiring a residential property for an amount below USD 500,000 will be entitled to a Multi-Entry Visa for a maximum of 180 days per year for a consecutive period of 5 years and renewable every 5 years depending on the status of ownership.

  • Non-citizens will be allowed to acquire life rights in residential care homes and other similar facilities outside smart cities on production of an authorisation from the Board of Investment granted after it has obtained the approval of the Minister.

  • A retired non-citizen will be given the option of transferring at least USD 2,500 monthly to be eligible to a residence permit.

For more information, please contact:

Marc Hein (Chairperson)
E: [email protected]

Nicolas Richard (Managing Partner)
E: [email protected]

Juristconsult Chambers

Level 12,
Nexteracom Tower II,
Cybercity, Ebène,
72201, Mauritius 
T +(230) 465 0020
[email protected]
www.juristconsult.com

         

The information is published for general information purposes and is not intended to constitute legal advice. Specialist legal advice should always be sought in relation to any particular situation. Juristconsult Chambers will accept no responsibility for any actions taken or not taken on the basis of this publication.

Juristconsult Chambers is a member of DLA Piper Africa, an alliance of leading independent law firms working together in association with DLA Piper across Africa.

Copyright © 2017 DLA Piper. All rights reserved.  |  JUN17  |

Please consider the environment before printing

This message was intended for [email protected]'
You have received this message because you are subscribed to 'Juristconsult Chambers'

Unsubscribe | To contact us please email [email protected]