MAURITIUS: OVERVIEW OF THE 2021-22 BUDGET – RECOVERY, REVIVAL AND RESILIENCE
On 11 June 2021, Dr the Honourable Renganaden Padayachy, the Minister of Finance, Economic Planning and Development presented his second National Budget, the theme of which was ‘Recovery, Revival and Resilience’.
The strategy adopted in the Budget relied on three pillars:
- giving an exceptional boost to investment;
- shaping a new economic architecture; and
- restoring confidence.
Whilst recognising that Mauritius has made significant improvements in the ease of doing business, in a bid to attract more investment into our economy, a few reforms have been proposed.
A Regulatory Impact Assessment Bill has been announced, the aim of which is to require regulatory bodies to submit an impact of upcoming regulations on the business environment. Furthermore, a series of new incentives and schemes have also been introduced, namely the Investment Certificate, the Export Development Certificate and the Premium Investor Certificate.
Biotechnology and Pharmaceutical Industry
Measures have been announced to attract investors in the biotechnology and pharmaceutical industry. The Government intends to encourage private companies to build factories for the manufacturing of pharmaceutical products and medical devices as well as for clinical and pre-clinical trials.
Some of the key incentives announced for this sector are:
- exemption on registration duty and land transfer tax, land conversion tax, and VAT on construction;
- companies engaged in the manufacture of pharmaceuticals and medical devices will be eligible for a premium investor certificate; and
- a tax rate of 3% instead of 15%.
Financial Services Industry
The strategy for the financial services industry under this Budget is two-fold:
- to enhance the status of our financial centre as a jurisdiction of highest global standards; and
- to continue to improve and deepen the service offerings of our financial centre.
New legislations have been announced for the financial services industry, including a Securitisation Bill, Securities Bill, which is a new legislation for virtual assets. It is also envisaged for the Bank of Mauritius (BOM) to roll out a Central Bank Digital Currency – The Digital Rupee.
The financial services industry is set to be modernised with the introduction of Special Purpose Acquisition Companies whilst the FSC One Platform will be launched for online applications.
The Minister had announced, in its previous Budget, the introduction of the Variable Capital Company, which received the approval of the Cabinet earlier this year, and the preparation of the Variable Capital Companies Bill is underway. These reforms, coupled with the developments announced in last year’s Budget, will surely increase our offerings and competitiveness on the market.
Maintaining the stride to complete the implementation of FATF Action Plan to achieve the Government’s commitment for an exit from the FATF list of jurisdictions under increased monitoring by September 2021, various amendments have been announced to strengthen our AML\CFT framework.
The AML/CFT Core Group will also be given legal force under the FIAMLA, a Financial Crime Commission will be established and a new BOM Bill and Banking Bill will be introduced to reflect international best practices.
Whilst we welcome the reforms announced by the Minister, the key factor in determining the resilience of the Mauritian economy lies in the timely implementation of these measures.
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