PAVING OUR WAY TO RECOVERY REVIVAL AND RESILIENCE

NATIONAL BUDGET 2021/2022

PAVING OUR WAY TO RECOVERY

REVIVAL AND REVIVAL AND RESILIENCERESILIENCE

SHAHEEN ABDUL CARRIMCEO / DIRECTOR

CEO’s MessageThe much-anticipated budget for 2021/22, which is also the second budget presented by Minister of Finance Dr Renganaden Padayachy is now known. It is considered one of the most crucial post-independence budgets as it heralds the way out of dire economic challenges induced by the crippling Covid-19 pandemic. Following a contraction of the economy of 15%, the worst in recent history and among the worst in Africa, it comes as no surprise that stimulating growth took the centre stage as the main strategic objective of government.

The minister announced a multi-pronged approach to tackle growth. It rests on the overarching objectives of boosting of investments, build a new economic architecture and restore confidence. He detailed a series of incentives that on one hand aim at developing new sectors and on the other give fresh impetus to existing ones. Measures for the development of a pharmaceutical sector, namely for the production of Covid-19 vaccines, and for the development of a proper green energy sector should provide opportunities for investments and job creation.

While few details were revealed about macro-economic stabilisation, putting tourism back on track was considered was a key priority. One of the most prominent announcements made by the minister was the phased easing of travel restrictions starting as from the 15 th of July when travellers will we allowed to visit and enjoy hotel facilities. Measures are being taken to ensure the sanitary safety of both visitors and locals. The restart of tourism should be a main driver to achieve an ambitious GDP growth target of 9% for financial year 2021/2022.

Investment which was flagged by the world bank as having dangerously declined during the past decade was addressed in the budget speech. The minister announced incentives such as the setting up of a Modernisation and Transformation Fund, reduced

interest rates, moratorium on loans and substantial reduction of red tape to facilitate the agricultural sector, SMEs as well as larger investors. Corporate Tax has not been increased.

Dr Padayachy devoted a significant part of his speech to explain how government proposes to reinvigorate the Mauritian financial sector which suffered successive setbacks with the inclusion of the jurisdiction on the blacklists of the EU and the UK as well as the grey list of FATF. He announced measures to enhance the AML-CFT framework. Among them, new legislation will be enacted to ensure better alignment with FATF as well as international banking best practice. Both the intermediate and the supreme courts will now have Financial Crimes Division to ensure better enforcement.

We firmly believe that the measures announced in the budget will be meaningful only if they are matched by strong economic leadership coupled with the commitment of the key players of the various economic sectors. As for the financial sector, we believe that the signals from developed nations are unequivocal. Blacklisting has been followed by the G7 decision to impose a global minimum for corporate tax. Our value proposition will therefore have to evolve from being overdependent on lower tax regimes to the optimisation of on other assets like our business-friendly jurisdiction, the competence of our people, our resourcefulness, and improved standards of corporate governance.

Our team at RockFin is already set to shift gear. In these challenging times, we will be called upon to be more productive. The best way of achieving this is to focus on our core business and devote our time to things that we do best. More than ever, our value proposition proves to be opportune. Let RockFin handle your compliance processes while you focus on what you are best at, running your business.

ROCKFIN COMPLIANCE SERVICES LTD BUDGET BRIEF 2021-2022

2020/2021 2021/2022 2022/2023 2023/2024

WORLD ECONOMY

Output growth rate (%) 6.0 4.4 3.5 3.4

MAURITIAN ECONOMY

Real GDP growth rate (%) -5.4 9.0 6.0 6.0

Investment rate (%) 18.9 20.7 20.9 21.4

Budget balance (% of GDP) -5.6 -5.0 -4.0 -3.5

Public sector gross debt (% of GDP) 95 91.4 87.1 82.4

2018 2019 2020 2021Unemployment rate % 6.9 6.7 9.2 9.2

Expenditure % of GDP 24.8 30.5 31.6 32 .5

Total revenue % of GDP 20.4 19.9 20.7 27.5

Government is setting the challenge for a positive evolution of the Mauritian economy over the next three years through maintaining a positive growth in GDP, investment and output, while simultaneously reducing the gross debt level as a proportion of GDP.

LONG TERM OBJECTIVE75% OF GDP BY END JUNE 2025

60% BY END JUNE 2030

ECONOMIC SNAPSHOT


The AML/CFT core group will be given legal force under the FIAMLA

The Financial crime commission will be established to fight against financial crime

Introduction of a new Banking Bill and Bank of Mauritius Bill to reflect best international practices.

The Stock exchange of Mauritius will introduce rules for the setting up of special purpose acquisition companies. BOM and FSC will launch a one-year AML/CFT and related issues training to a minimum of 100 young graduates and granting a monthly stipend of MUR 15,000.

To sustain the development of the sector: (i) Introduction of a Securitisation Bill (ii) A new securities bill will be introduced (iii) Introduction a dedicated QR code at National Level to facilitate digital payments. (iv) Rolling out of The Digital Rupee on a pilot basis by the BOM (v) Introduction of new legislation for virtual asset will be enacted (vi) Revamping of BOM guidelines allowing the setting up of regional offices by international banks (vii) Setting up of an Open-Lab by the BOM and the FSC for banking and payment Solutions and a

FinTech Innovation Lab (viii) Implementation of a Digital centralised information exchange system by the FSC to facilitate

motor insurance claim recoveries (xi) Launching of FSC One-platform as an online licensing portal effective as from 1 July 2021

The Financial Services Sector is amongst the few sectors in Mauritius still yielding a positive growth in this time of crisis. The main governmental strategies to sustain

this growth will be to have an attractive financial centre by making Mauritius a jurisdiction of highest international standards and continue to improve the

financial services through the following measures:

Financial Services Sector


Changes in Legislations

COMPANIES ACT

The Companies Act will be amended to cater the following amongst other measures:

Comply with requirements of Financial Action Task Force (FATF) regarding the protection of companies from terrorist financing abuse by;

Monitoring of company service providers and reporting of suspicious transactions;

Sharing of information with law enforcement agencies and institutions involved in the prevention of money laundering, combating of terrorism financing and proliferation financing in Mauritius and abroad;

Effective supervision on all entities falling under the purview of the Registrar of Companies through the application of proportionate and dissuasive sanctions;

Protection of companies limited by guarantee from terrorist financing abuse by, amongst others;

(i) authorising the Registrar of Companies to issue guidelines;

(ii) empowering the Registrar of Companies to conduct examinations and investigations;

(iii) providing for sanctions for non-compliance and offences committed under the Companies Act.

FINANCIAL INTELLIGENCE AND ANTI-MONEY LAUNDERING ACT

The Financial Intelligence and Anti-Money Laundering Act (FIAMLA) will be amended to cater the following amongst other measures - allow for lodging of predicate offence and money laundering offence under

a single information even if the investigations are being conducted by different investigatory authorities;

include private pension schemes under the purview of the FIAMLA; review the definition of “financial institution” to include a qualified trustee

as defined under the Trusts Act instead of only referring to the Trusts Act; provide that decisions of regulatory bodies as defined in FIAMLA shall

take effect immediately after 21 days of the decision; require a reporting person to provide information to its regulatory body

even if the person is not carrying out the listed activities under the FIAMLA; empower the FIU to impose administrative sanctions on law practitioners

who fail to comply with Anti Money Laundering and Combatting the Financing of Terrorism (AML/CFT) requirements;

provide for the establishment of a Core Group on AML/CFT; provide for the National Committee on AML/CFT to be chaired by the

Supervising Officer of the Ministry responsible for the subject of money laundering;

provide for the establishment of an Interagency Coordination Committee to promote effective cooperation and coordination among its members in the implementation of the international standards on AML/CFT and proliferation.


Changes in Legislations

STRENGTHENING INTERNAL AUDIT AND ESTABLISHING RISK MANAGEMENT IN THE PUBLIC

SECTOR

Being a pillar of the public financial management system, the role of internal audit will be enhanced to provide quality internal audit services to Government in meeting its objectives.

Establishment of a formal risk management framework in the public sector to mitigate risks.

Creation of a risk management framework by implementing an Internal Control Cadre and the Audit Committees.

FINANCIAL SERVICES ACT

The Financial Services Act will be amended to cater the following amongst others –

No FSC approval required for the issue of shares of less than 5% in a licensee unless such issue results in a change in control in the licensee

The FSC authorised to require the Official Receiver, a Liquidator, Provisional Liquidator, Administrator or Special Administrator to provide the FSC with information relating to its licensee or past licensee for the discharge of its functions

Extend the possibility to request for a certificate of good standing from the FSC to all its licensees, and to legal practitioners and accounting firms with the consent of the licensee

GAMBLING REGULATORY AUTHORITY ACT

The Gambling Regulatory Authority Act will be amended to cater the following amongst others –

Align the definition of “suspicious transaction” with the requirement of the action plan of the FIAMLA recommendations


SHAPING THE DIGITAL FUTURE

Despite the pandemic, the ICT/BPO sector has performed well with a growth rate of 5.9% in 2020. In order to further enhance the sector’s development and resilience, the following measures have been announced:

Expanding the digital highway to the rest of the world with the METISS cable connecting Mauritius to South Africa since March 2021

A Digital Industries Academy (DIA) will be set up by the EDB

Trainees at the DIA will benefit from a total stipend of up to MUR 15,000 equally shared between HRDC and the private sector

Government to introduce mobile and contactless payment systems, starting with the Registrar-General, NLTA and the Companies Division

AMENDMENTS TO THE FINANCIAL SERVICES ACT

Definition provided for “Fintech”, “Regulatory Sandbox”, “Regulatory Sandbox Authorisation” and “Regtech”;

Framework established for applying for a Regulatory Sandbox Authorisation;

The FSC now authorized to set up such fintech innovation hubs and finnovation and digital labs for the non-banking financial services sector;

FSC authorized to regulate and supervise financial institutions or start-ups providing relevant services under the FinTech Regulatory Sandbox licence issued by the FSC, with such consequential adaptations as may be required to give thereto.

Fintech


Taxation ServicesThrough the tax measures, the government has a national tool at its disposal in the fight against Covid aftermaths locally; while encouraging the individual and corporate citizens to contribute in the vaccination programme, it is

also alleviating the burden on sectors seriously impacted with a view to boosting up the economy.

COVID-19 VACCINATION PROGRAMME

Individuals contributing to the COVID-19 Vaccination Programme Fund will be allowed to deduct the amount contributed from their taxable income.

TAX ON WINNINGS

The 10% tax imposed on winnings will cover also winners of Lotterie Vert.

OTHER INCOME TAX ACT AMENDMENTS

Dividend paid by a non-resident to another non-resident is not taxable in Mauritius.

An exemption from taxable income is being allowed in respect of donations made to an approved charitable NGO or religious bodies up to an amount of MUR 30,000.

An exemption from taxable income of an amount of up to MUR 30,000 is being allowed in respect of an individual pension scheme.

INDIVIDUAL TAX MEASURES

HOME OWNERSHIP REFUND SCHEME

A Mauritian Citizen acquiring, in financial year (FY) 2021-2022, a house, an apartment or bare land to construct a residential unit will be eligible to a payment representing 5% of the declared value of the immovable property up to a maximum of MUR 500,000 per property acquired.

MEDICAL INSURANCE

Increasing the maximum allowable deduction for medical insurance premiums from:

(i) MUR 15,000 to MUR 20,000 for an individual and his first dependent;

(ii) MUR 10,000 to MUR 15,000 for every other dependent.


Taxation Services

CORPORATE TAX MEASURES

COVID-19 VACCINATION PROGRAMME

Enterprises contributing to the COVID-19 Vaccination Programme Fund will be allowed to deduct the amount contributed from their taxable income at the time of submission of their income tax return.

TAX PAYMENT UNDER ADVANCE PAYMENT SYSTEM

The method for computing tax liability of companies under the Advance Payment System will be amended to cater for companies which are subject to corporate tax at a lower rate than the 15% standard tax rate.

DEFERRAL OF TAX PAYMENT

The Income Tax Act will be amended to ratify the decision for the income tax liability of companies under the Advance Payment System (APS) due in November 2020 up to May 2021, to be deferred until 30 June 2021.

GAMBLING LEVY

The Levy paid by gambling operators as per Section 114 of the Gambling Regulatory Authority Act will not be allowed as a deduction for income tax purposes.

FINANCIAL SERVICES INDUSTRY

Extension of the tax holiday for Family Offices as well as Fund and Asset Managers from 5 to 10 years.

TOURISM

Reduction of the registration tax on transfer of lease of state lands from 20% to 10% for hotels for a two-year period.

OTHER INCOME TAX ACT AMENDMENTS

Broadening of the scope of partial exemption tax regime to cover licensed investment dealers and activities relating to the leasing of locomotives and train including rails leasing.

Exclusion of foreign limited partnership which is a non-tax resident from the need to submit a return of dividend.

Ensuring that Foundations and Trusts benefitting from a preferential tax regime comply with the OECD standards including substantial activity requirements.

VAT

The time limit of 30 days for MRA to give ruling on VAT issues will run as from the date of submission of all documents and information requested by MRA.

Provision will be made to allow a taxpayer to submit electronically any information requested by MRA.

OTHER TAX/TAX RELATED MEASURES

Exemption of registration duty on the first MUR 5 million of the cost residential property (previously restricted to properties whose value is below MUR 5 million) for first time buyers.

Land duties and taxes will be levied on the value of the immovable excluding any VAT payable. This amendment will be backdated to take effect as from 1 January 2021.

A tax of MUR 2 per litre on Diesel/Petrol to finance Covid Vaccination campaign.


REOPENING OF BORDERS

With a view to boost the tourism sector which has been the most affected sector since the pandemic, tourists will be welcomed anew to Mauritius as from 15 July 2021. Measures taken are as follows:

No restriction to vaccinated tourists with a negative PCR test travelling to Mauritius

Invest Hotel Scheme amended to attract more long-term visitors

Minimum selling price of a standalone villa reduced from USD 500,000 to USD 375,000.

RESIDENCE PERMIT AND NEW APPLICATION PROCESS

Residence permit issued to non-citizen who purchases or otherwise acquires an apartment used, or available for use, as residence, in a building of at least 2 floors above ground floor, provided the purchase price is not less than USD 375,000. Dependents included. No requirement of a work or occupation permit.

Applying to EDB for relevant residency permits through dedicated website for marketing the different residency schemes available for non-citizens

Application to EDB for relevant residency permits through dedicated website for marketing the different residency schemes available for non-citizens

EDB to enhance its social media presence and increase its presence in the international media to promote the work-live-retire concept.

Work & Live in Mauritius


PERMANENT RESIDENCE PERMIT

Validity of holders of a 10-Year Permanent Residence Permit automatically extended to cover a 20-Year period.

Renewal of permits by holders of a Permanent Residence Permit and flexibility provided to switch category between investor, professional and retired.

WORK PERMIT

The Work Permit extended to allow Mauritians and non-citizen residents to bring foreign carers and maids to work in Mauritius.

The legislative framework amended to include MOFEPD in the delivery process of work permits.

OCCUPATION PERMIT

Replacement of paper-based Occupation Permit by a Smart Card.

Extension of validity of Occupation Permit for Professional from 3 to 10 years in line with investors, self-employed, and retired non-citizens.

Flexibility given to non– citizens holding an Occupation Permit as a Professional to switch job without having to submit a new application provided the minimum criteria are met.

Non-citizens holding an OP as self-employed allowed to incorporate a one-man company and employ administrative staff.

The criteria for young professional Occupation Permit reviewed.

Spouse of OP holders willing to invest or work in Mauritius be exempted from applying for an Occupation Permit or a work permit.

The maximum age limit of 24 years for dependent children waived off.

Introduction of a new category - the 10-Year Family Occupation Permit for those contributing USD 250,000 to the COVID-19 Projects Development Fund.

Dedicated concierge service set up by EDB to provide a seamless experience to investors and retirees entering Mauritius

A privilege club scheme implemented to provide a range of incentives to Occupation Permit holders and retirees, ranging from privilege access to hotels, golf courses, restaurants, private medical institutions, amongst others.

Work & Live in Mauritius


BUSINESS FACILITATION

Business will need to register with the Economic Development Board to avail of incentives which are:

Facilitation and advisory services to all businesses;

Dedication of an Accounts Manager to all registered businesses;

Information sharing platform with the MRA and CBRD.

Development of a new Companies and Businesses Registration Integrated System.

Introduction of electronic business registration card.

GOOD REGULATORY PRACTICE

Introduction of a Regulatory Impact Assessment Bill requiring Regulatory bodies, amongst others, to submit an impact of upcoming regulations on the business environment.

Setting up of a RIA Office to oversee and monitor the quality of assessments, under the Prime Minister’s Office.

Setting up of a Business Regulatory Reform Council (BBRC) mandated to address regulatory and administrative reform needs, advise Government on regulatory policy and empowered to recommend and instruct regulatory bodies for implementation.

Sectorial Review


TOURISM

Business will need to register with the Economic Development Board to avail of incentives which are:

Facilitation and advisory services to all businesses;

Dedication of an Accounts Manager to all registered businesses;

Information sharing platform with the MRA and CBRD.

Development of a new Companies and Businesses Registration Integrated System.

Introduction of electronic business registration card.

GOOD REGULATORY PRACTICE

Introduction of a Regulatory Impact Assessment Bill requiring Regulatory bodies, amongst others, to submit an impact of upcoming regulations on the business environment.

Setting up of a RIA Office to oversee and monitor the quality of assessments, under the Prime Minister’s Office.

Setting up of a Business Regulatory Reform Council (BBRC) mandated to address regulatory and administrative reform needs, advise Government on regulatory policy and empowered to recommend and instruct regulatory bodies for implementation.

ROCKFIN LIMITED.NATIONAL BUDGET 2021/2022

Sectorial ReviewREGULATORY REFORMS

Introduction of an Insolvency (Amendment) Bill to factor in developments in insolvency practices.

REFORMS IN THE JUDICIARY

Review of court procedures in view of expediting commercial disputes and the upgrading of the E-Judiciary system.

CONSTRUCTION AND REAL ESTATE

The Real Estate Agent Authority Act will be amended to require a licensed real estate agent to register himself with the FIU within 5 working days of his registration with the Real Estate Agent Authority.

An individual buying a house, apartment, or land to construct his residence in the financial year 2021/2022 will benefit from a refund of 5% at the cost of the property, up to a maximum of MUR 500,000.

Those contracting a Home Loan to construct their residence will benefit from a refund of 5% of the Home Loan, up to a maximum of MUR 500,000.

Government will work with commercial banks to introduce a mortgage scheme to cover:

(a) 80% of housing loans for Self-Employed individuals and contractual employees; and

(b) 100% of housing loans for other individuals.

Sectorial Review


Increasing the maximum investment through licensed crowd lending platforms by the IFI from MUR 200,000 to MUR 1 million per project.

Introduction of a Regulatory Impact Assessment Bill and the legislation will require Regulatory bodies, amongst others, to submit an impact of upcoming regulations on the business environment.

An Insolvency (Amendment) Bill to factor in developments in insolvency practices since 2009 with a particular focus on preserving businesses amidst the COVID-19 pandemic.

Request for Certificate of good standing from the Registrar of Companies for Global Business Companies will be extended to cover legal advisers and accounting firms.

Other Aspects

MUR 200,000 toMUR 1 million


About RockFin

COMPLIANCE SERVICES

Client Acceptance & Onboarding exercise

Carrying out due diligence exercise on individual/entity Ensuring the completeness of due diligence documents provided Generating KYC search and reports and verifications in line with the UN

sanction list, OFAC and FATF Client risk assessment Identification of source of funds/wealth Enhancing due diligence in case of high risk client

On-Going Monitoring

Compliance review of client files Transaction monitoring Risk management & assessment Ensuring compliance with statutory filing requirements Regular checks (such as World check and Independent check) Liaising with authorities Assisting for suspicious transaction reporting

Working towards a higher level of compliance, RockFin builds tailor-made solutions for companies to enable them to focus on their core business while we take care of their compliance requirements.

Our portfolio of clients include global financial services institutions, multi- national corporations (MNCs), small & medium enterprises (SMEs), start-ups, amongst others.

CONSULTING SERVICES

Implement and review policies/procedure and control to ensure that clients are in compliance with all relevant law, rules, regulation, code and guidelines

Implement risk management and compliance framework Implement and review clients’ onboarding process / CAP process Preparing and assisting for regulatory visit Recommendation for improvement of clients’ compliance & control framework Drafting of compliance manual AML policies & procedures Risk-based monitoring program Business continuity plan Audit Training FATCA/CRS – XML conversion


Suite 306, Level 3, Ebene House, Hotel Avenue, 33 Cybercity, Ebene 72201, Republic of Mauritius.

M: (+230) 5259 7964 | O: (+230) 468 7332 | E: [email protected]

www.rockfin.mu


Documents

PAVING OUR WAY TO RECOVERY REVIVAL AND RESILIENCE