In his Budget Speech 2020-2021, the Honourable Minister announced that "the New Normal is not imposed on us, it is chosen." In his previous budget, the Honourable Minister announced a series of courageous reforms (i) to preserve jobs and livelihoods for the most vulnerable of the society, (ii) to rebuild the economy and (iii) to ensure an inclusive, robust and sustainable economic development. It was a budget for a better tomorrow for all Mauritians. Last year's budget was to minimise the adverse effects of the COVID-19 pandemic, in particular to preserve jobs and to provide financial assistance to companies to prevent them to go bankrupt. Admittedly, the objectives announced in the previous Budget 2020-2021 have, to a large extent, been achieved; however, it is imperative that this recovery process continues for the ultimate benefits of the society at large. A key sector that will be closely monitored will be the tourism sector. With the opening of the borders in two phases, the country is aiming to welcome some 650,000 tourists over the next 12 months. To this end, the Honourable Minister announced a significant to the Mauritius Tourism Promotion Authority.
In this document, we set out the main measures which the Honourable Minister has announced in his Budget Speech 2021-2022. It is hoped that the measures will help the country as whole to achieve long-term economic recovery and a more inclusive society
The Minister announced the Government's intention to encourage more Mauritian citizens to become homeowners. With that objective in mind, the following measures were announced:
- The construction of 12,000 new social housing units;
- The earmarking of Rs 2 billion to support the purchase of residential land and property as well as the construction of housing units by individuals;
- 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% of the costs of the property, up to a maximum of Rs 500,000. The payment will be in respect of the purchase of residential properties in the financial year and the refund granted even if the purchaser has been exempted from payment of registration duty on the acquisition of the property. If the property is sold within a period of one year of the date of the acquisition, the amount received under the scheme will have to be refunded.
- 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 Rs 500,000;
- Registration duty exemption for first-time buyers will apply to the first Rs 5 million of the acquisition value, instead of being limited to property whose value does not exceed Rs 5 million;
- 2,000 lots will be put on sale by the State Investment Corporation and Rose-Belle Sugar Estate for residential purposes; and
- 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
With Government's support during the Covid-19 pandemic to businesses and individuals, coupled with a decrease in revenue, budget deficit for the year 2020/2021 is expected to reach 5.6% of GDP and estimated to be contained within 5% for the year 2021-2022. GDP contractions in the years 2019/2020 and 2020/2021 have also seen a significant rise in public sector debt to 95% of GDP. With a projected GDP growth of 9% in 2021-2022, that figure is estimated to decrease to 91% and the Government's objective is to further reduce public sector debt to 80% by 2025 and 70% by 2030.
Financial Services and Ease of Doing Business
01 - Financial Services
It was pleasantly noted that the Financial Services Sector is one of the few sectors which registered a positive growth in 2020. The strategy envisaged for the sector is two-fold:
- to enhance the status of the jurisdiction as a financial centre of highest global standards; and
- to improve and deepen the service offerings.
The country remains committed to fully comply with international AML-CFT requirements. The government is sparing no efforts to complete the implementation of the Financial Action Task Force (FATF) Action Plan for an early exit of the FATF list of jurisdictions under increased monitoring. Various measures including supervisory, regulatory and law enforcement were introduced to further strengthen the sustainability and effectiveness of the AML-CFT system. To enhance the AML-CFT legislative framework and its implementation, the following actions were undertaken:
- Relevant legislations were amended to meet the requirements of the FATF Recommendations on AML-CFT;
- New personnel were recruited to strengthen the compliance capacity; and
- Financial Crimes Divisions were set-up at the Supreme Court and the Intermediate Court with a view to ensuring that financial crime cases are dealt with expeditiously.
n order to sustain the initiatives, the AML-CFT Core Group will being given legal force under the Financial Intelligence Ant-Money Laundering Act and a Financial Crime Commission will be established for a more effective management in the fight against financial crime.
The following measures will be taken to pursue the development of the sector:
- A Securitisation Bill will be introduced;
- The tax holiday for Family Offices as well as Fund and Asset Managers will be extended from 5 to 10 years; For the setting-up of Family Offices, the need for a Global Business licence will be eliminated.
- A new Securities Bill will be introduced;
- A new legislation for virtual assets will be enacted;
- The Bank of Mauritius (BOM) will roll-out a Central Bank Digital Currency - The Digital Rupee - on a pilot basis;
- The BOM will introduce a dedicated QR Code at national level to facilitate digital payments;
- The BOM guidelines allowing the setting-up of regional offices by international banks will be revamped in line with latest international trends;
- The BOM and the Financial Services Commission (FSC) will set up respectively an Open-Lab for banking and payment Solutions and a FinTech Innovation Lab to encourage an entrepreneurship culture;
- The FSC will also implement a digital centralised information exchange system to facilitate motor insurance claim recoveries;
- The FSC One platform will be launched as an online licensing portal as from 1st July 2021;
- The Stock Exchange of Mauritius will introduce rules for the setting-up of Special Purpose Acquisition Companies; and
- The BOM and the FSC will launch a one-year training programme on AML and related matters for a minimum of 100 graduates.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.