We are happy to share with you the key points from the Mauritius Budget 2013 that we believe are of significance to you.

27 Dec 2012

This Budget aims at consolidating the economic fundamentals of Mauritius. It contains interesting measures to increase revenue especially from services whilst ensuring further investment in technology, education and targeted social benefits. It also shows the commitment of the Government to continue the policy of further opening up the economy by simplifying the procedures of doing business in Mauritius.

We particularly welcome the strategy to consolidate Mauritius as an investment hub for Africa; the measures aimed at developing the Global Business sector, particularly in relation to enhancing commercial substance to obtain a tax residence certificate and developing Regional Treasury Centres and Regional Headquarters; and the relaxation of conditions for occupational permits for foreigners. Whilst these measures set a clear commitment of Government to develop Mauritius as an international financial centre, we believe the Budget could have gone further in the following respects:
• Spelling out clearly the vision and measures to ensure the full integration of the global business sector into the domestic economy. This would allow international businesses to make use of the services available in the country other than financial services, whilst ensuring that the country benefits from the knowhow and added value of these businesses as they are encouraged to do business in and from Mauritius.
• Recognise the need and take the appropriate measures for the marketing and promotion of Mauritius as an international financial centre and a business hub for Africa;
• Provide the right environment and measures to open up the air connectivity of Mauritius.

Budget Highlights
Mauritius Vice Prime Minister and Minister of Finance & Economic Development, Honorable Xavier-Luc Duval, delivered on Friday 9 November 2012, his second Budget Speech since his coming into office. Articulated around the general theme of the country’s need to address the challenges of today’s turbulent world, the budget for fiscal year 2013 is also viewed as an opportunity for Mauritius to consolidate its economic fundamentals and enhance its position as an investment hub within the Africa-Middle-East-Asia growth triangle. GDP is forecast to grow by 4%, budget deficit to shrink to 2.2% of GDP, while public sector debt should continue its declining trend to reach 53.7% of GDP in 2013.

The overarching theme to the 2013 Budget rests on six main objectives:
• Reinforce Mauritius Africa strategy by sharing experience on democracy and governance, fast tracking regional integration, enlarging economic opportunities and acting as a catalyst for investment
• Embrace technology to improve quality of life of citizens, create growth in companies and improve efficiency of government
• Support growth and create employment by consolidating traditional and emerging economic sectors, of which financial services
• Strengthen public services with a particular focus on health and education
• Protect the vulnerable by extending the program of aid and social housing, and
• Ensure sound macroeconomic management

A new comprehensive strategy for Africa
Mauritius economic integration with Africa and the role it plays as an investment hub for the continent should be given a further boost by new measures announced:
• 5 additional Double Taxation Agreements with African nations earmarked for signature in 2013, after those signed with the Republic of Congo, Kenya and Nigeria in 2012
• Visa exemption or delivery on arrival for nationals from 29 additional African countries
• Extension of diplomatic representations with Honorary Consuls appointed in every major city on the continent (this follows the appointment in 2012 of two roving ambassadors to Africa)
• Companies operating in the Mauritius Freeport at the seaport and the airport already benefiting from indefinite tax holiday will henceforth also be allowed to carry out specific manufacturing activities provided these are being done for export onto the African market. Additional Freeport zones will be developed next to the seaport and airport areas.

Consolidating Mauritius global business sector
The global business sector should remain a high growth sector and a major source of productivity and employment. Efforts will continue to encourage more substance and more high ‘value-added’ activities in that sector. To consolidate the latter’s geographical and product diversification, the following measures are announced:
• A Limited Liability Partnership bill to be presented in Parliament;
• The confidentiality provision of LPs owned by Global Business companies to be clarified;
• The Securities Regulation 2008 (Collective Investment Scheme and Closed End Funds) to be amended to allow the setting up of special funds for conducting business outside Mauritius;
• A specific regime for non-treaty based funds to be created to exempt such funds from Mauritius tax;
• Position Mauritius to benefit from the setting up of Regional Treasury Centres and Regional Headquarters;
• Extend Mauritius’ network of DTAAs and IPPAs;
• A bilateral investment treaty to be signed with USA.

The regulatory framework will also undergo change, namely:
• Tax Residence Certificates to be issued henceforth only upon compliance with enhanced commercial substance requirements and payment of a TRC fee
• License fees of Management Companies to be based on turnover, and
• The Financial Services Commission to implement automatic and rules-based penalties for non-compliance including cases of late filing of documents and late payment.
The Minister also announced the impending signature of a Tax Information Exchange Agreement with India.

Introducing a new regime for Occupation Permits
Henceforth there will be two categories of Occupation Permits:
• Category 1: Professionals earning more than US$ 3,000 per month and persons having invested more than US$ 100,000
• Category 2: All the other non-citizens under the current schemes
Occupation Permit holders satisfying certain eligibility criteria will now be allowed to purchase property in Mauritius. Additionally, non-citizens who invest a minimum of USD 500,000 into a qualifying activity in Mauritius will obtain permanent residence in Mauritius.

http://www.abaxservices.com/abaxservices/en/impact-investment-and-investment-in-agribusiness