NATIONAL B

UDGET

2019 -2020

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Cruising across the waves of continuity in a complex conjunctural global climateHonourable Pravind Kumar Jugnauth, Prime Minister, Minister of Home Affairs, External Communications and National Development Unit, Minister of Finance and Economic Development , delivered his budget speech for year 2019/2020 in a mood characterized by the will to uphold the country’s momentum on its already-defined trajectory and in the context of the current world situation depicted by tensions on different fronts related to trade, geopolitical, social and environmental issues. The budget is a hotchpotch of critical measures addressed by the Prime Minister and which touches on delicate subjects impacting on our society both at present and in future. While there are tinges here and there to restore equilibrium in certain vulnerable areas, there is also this hard resolve to cut across the various strata of society in order to take the bull by the horns with respect to sensitive issues linked to drugs, inequality generally and resilience throughout the entire fabric of our manufacturing industry.

The budget hinges on ten principles that would, in the view of the Prime Minister, enable the country to enfold inclusiveness, sustainable economic growth and innovation in a modern and brighter future for the whole nation knitted together. The first principle dwells upon the need to reinforce the existing pillars of the economy and focuses on fostering the spirit of innovation in our youth, increasing their productivity through upskilling and talent-enhanced measures, and stimulating one of the key factors of growth which is private investment. The productive sectors of our economy are vital for the achievement of growth in the medium to long-term and the Prime Minister has taken some valid measures in conjunction with the specificities of each of the following sectors and with an embedded philosophy of democratisation: sugarcane, non-sugarcane, manufacturing, ocean, cooperative, tourism and financial services. The challenge remains in the latter philosophy being able to crystallize in practical terms based on the exigencies imposed by natural justice, fairness and transparency.The recent visits by African statesmen should necessarily usher a new era for bilateral cooperation and in this respect the budget specifically addresses the issue by allowing and giving proper incentives for our economic space to broaden and diversify. All this would not be achievable without having the proper infrastructure to enable our aspirations to bear fruits in future. Amongst the accompanying measures are included the revamping of our infrastructure throughout the island and the modernization of our seaport as well as the upgrading of the airport terminal. The public sector will also undergo a healthy overhaul in that the role of Government in the economy will be reassessed and the efficiency and delivery of public services will be ameliorated and digitalised.

One of the various themes of the budget which is quite commendable includes the promotion of gender equality and empowering of women at work and in society. For instance, Public Companies and Statutory Bodies will be required to appoint at least one woman on their board of directors. The country does not exist in a vacuum and cannot ignore certain basic laws of nature in relation to either the safety of its citizens or the impact that our actions may engender in relation to the environment. The budget specifically addresses those two issues and measures will be taken accordingly, through proper legislation, enhanced support from relevant authorities and private sector participation, to mitigate those ailing agents that thwart the advancement of our nation. Also, it is being recognized more and more that Mauritius’ territorial influence and ownership need to be carefully propped up and hence the budget amply provides for

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infrastructure enhancement and rejuvenation of the outer islands, including Rodrigues and Agalega. Amongst the budget estimates for year 2019/2020, there are two macroeconomic indicators which are worthy of analysis and reflection. While the projected budget deficit for the coming year has been estimated at Rs 16.9 billion, representing 3.2% of GDP, there is a need to assess whether some items may have been left out especially on the expense side due to accounting of same in other state corporations. If such is the case, then the budget deficit will definitely cross the calculated figure of 3.2%. Secondly, all things being equal, the intended bringing down of the public sector debt to 60% of GDP by end of June 2021 may not be achievable should some financing be accounted off-budget and should the growth rate of our real GDP not exceed the 4% benchmark in 2020 as has been announced in the budget.

The budget exercise is a plan for the future and will surely face the test of time as and when events and predictions unfold. What is crucial for the success and ultimate implementation of all budgetary measures is that all stakeholders, especially those in positions of influence, share the common vision embraced by the Prime Minister in his budget speech. Or else, we will need to make adjustments during the course of time and ‘changer de fusil d’épaule’ before the next budget speech…..

Shamin A. SookiaManaging DirectorPerigeum Capital Ltd

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CONTENTSECONOMIC REVIEW AND OUTLOOK

FISCAL MEASURES

FINANCIAL SERVICES

INFRASTRUCTURE DEVELOPMENTCONSTRUCTION & REAL ESTATE

TOURISM

BUSINESS FACILITATION

FINTECH, THE DIGITAL ECONOMYRESEARCH & INNOVATION

RENEWABLE ENERGY & ENVIRONMENTAL MEASURES

MANUFACTURING, AGRO-INDUSTRY AND LOGISTICS

HEALTHCARE & BIOTECHNOLOGY

OTHERS

OCEAN ECONOMY

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Mauritius GDP Growth

20192018

3.8% 3.9%

20192018

6.9% 6.9%

20192018

3.2%1.5%

Source for 2019 figure: Budget Speech 2019 - 2020Source for 2018 figure: http://statsmauritius.govmu.org/English/Publications/Pages/CPI_4Qtr18.aspx

Budget Estimates for 2019 - 2020 MUR’Bn

Recurrent Expenditure 121.6Capital Expenditure 17Total Expenditure 138.6

Tax Receipts 104.7Non-tax and other revenue 10.7Grants 6.3

Total Revenue 121.7

Budget Deficit -16.9

• Disposal of certain non-strategic assets to reduce the level of government debt• Early repayment of public sector debt by using part of the accumulated undistributed surplus held at the Bank of Mauritius• As regards to public sector debt, the statutory requirement was to bring it down to 60% as a ratio of GDP by end of June 2021

Economic Review and Outlook

% Growth

Year

OTHER EXPENSES - 5%

HEALTH - 10%

EDUCATION - 13%

GENERAL PUBLIC SERVICES - 26%

PUBLIC ORDER AND SAFETY - 9%

ECONOMIC AFFAIRS - 10%

SOCIAL PROTECTION - 27%

MUR 138.6 BN

TOTAL EXPENDITURE

Mauritius GDP Growth Unemployment Rate Inflation Rate

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20.5 %

In 2019, it is expected that total investment as a ratio of GDP will rise to 20.5%

94 %

Country’s Reserves Increase (2014 – 2019)

· The country’s reserves has increased by 94%

· This represents 11.2 months import cover

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(I) FINANCIAL SERVICES1. Creating New Opportunities in Financial Services

To diversify the product base of the Mauritius International Financial Centre (“IFC”), the following will be introduced:a) new rules and an attractive tax regime to promote the development of Real Estate Investment Trusts (REITs);b) an ‘umbrella licence’ for wealth management activities;c) a scheme for headquartering of ‘e-commerce’ activities;d) a framework for Green Finance in line with the ‘Marrakech Pledge’ – a continental coalition of African Capital Markets Regulators and Exchanges

committed to foster green financing on the continent; ande) a new trading platform at the Stock Exchange of Mauritius to allow medium sized profitable enterprises that do not qualify for listing on the Official and

DEM markets to raise capital and trade their shares.

2. Revamping Of Special Purpose Fund Regime

a) Establishing a new framework for fund administration and fund managementb) Revamping the existing Special Purpose Fund regime to ease access to new marketsc) FSC entering into an agreement with the Gujarat International Finance Tec-City to recognise Mauritian licensed funds and management companies as

qualified to operate in the Gujarat jurisdiction as well.

3. Real Estate Investment Trusts (REITs)

Mauritius seeks to further develop the product base of its International Financial Centre by establishing new rules and an attractive tax regime to promote the development of Real Estate Investment Trusts (REITs) thereby joining countries that have enacted REITs legislation, including all G7 countries.

REITs are companies that own, operate or finance income-producing real estate assets and which securities are generally traded on an exchange thus allowing investors to gain access to the property market for a minimum investment and under specific regulatory and fiscal framework. We still have to wait for the rules to be published and the various laws to be amended. However, these investment vehicles are normally tax transparent and are required t o distribute most o f their income t o their investors, hence presenting an attractive product to pension funds and other investors. Hopefully, this will encourage property companies to list on the Stock Exchange of Mauritius Ltd and at the same time attract FDI in the already expanding real estate sector in Mauritius.

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4. Developing the Financial Services Sector

(a) Coordinated approach to Private Banking and Wealth Management LicensingThe Bank of Mauritius and the FSC will explore the convergence of Private Banking and Wealth Management licences.

(b) Head-Quartering of E-Commerce activities in Mauritius The Financial Services Act 2007 will be amended to introduce a scheme for the Head Quartering of E-Commerce activities in Mauritius.

(c) Upgrading the Regulatory Sandbox Licence Framework The Economic Development Board will pursue consultations with relevant stakeholders with a view to proposing appropriate amendments to upgrade the Regulatory Sandbox Licensing Framework for Fintech Activities.

(II) FISCAL MEASURES1. Income Tax

The existing income exemption thresholds are being increased as shown below.

Category From ToA. Individual with no dependent Rs 305,000 Rs 310,000B. Individual with one dependent Rs 415,000 Rs 420,000C. Individual with two dependents Rs 480,000 Rs 500,000D. Individual with three dependents Rs 525,000 Rs 550,000E. Individual with four or more dependents Rs 555,000 Rs 600,000F. Retired/disabled person with no dependent Rs 355,000 Rs 360,000G. Retired/disabled person with dependents Rs 465,000 Rs 470,000

Tax Band of 10%

The tax rate of an individual who derives annual net income of up to Rs 700,000 is 10%.

PAYE will apply at the rate of 10% if the average cumulative emolument in a month is below Rs 53,845.

Negative Income Tax / Special AllowanceAn additional quarterly return will have to be submitted to the MRA to provide information about household employees in respect of negative income tax or special allowance.

Employers will be required to submit NPF/NSF returns and quarterly statements as well as effect payments electronically.

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2. Tax Holidays

Innovation Box RegimeCompanies engaged in innovation-driven activities will now benefit from a tax holiday of 8 years on income derived from their intellectual property assets developed in Mauritius subject to the fulfilment of pre-defined substantial activities conditions in line with BEPS requirements.

E-Commerce PlatformCompanies incorporated in Mauritius before 30th June 2025 with a view to operate an e-commerce platform will be granted a 5 year tax holiday.

Peer-to-Peer LendingFollowing the publication of the Peer-to-Peer Lending Rules by the FSC last year, it is now contemplated that Peer-to-Peer lending operators will benefit from a 5-year tax holiday subject to the former being operational before 31st December 2020.

3. Other Exemptions and Reliefs

Additional Deduction for Tertiary EducationDeduction in respect of a dependent child who is pursuing tertiary studies now applies for a maximum of 4 dependents.

Relief for Medical or Health Insurance PremiumClaim for relief in respect of medical insurance premium will be allowed for a fourth dependent up to Rs 10,000.

4. Solidarity LevyThe computation of solidarity levy will exclude lump sum income received by way of commutation of pension, death gratuity or as compensation for death or injury and will take effect as from 1st July 2017.

5. Accelerated DepreciationCapital expenditure incurred on plant and machinery may now be fully expensed up to an amount of Rs 60,000.

6. Taxation of Banksa) Income derived by banks from Global Business Companies will not be subject to the levy under the Value Added Tax Act 1998;b) Banks having operating income exceeding 1.2 billion MUR per year will attract a levy of 4.5% on their operating income;c) The above mentioned levy will not fall to be a deductible expense under corporate tax and no foreign tax credit will be allowed;d) Banks which grant at least 5% of their new banking facilities to (i) SMEs in Mauritius; (ii) companies operating in agricultural, manufacturing or production

of renewable energy in Mauritius; or (iii) operators in African or Asian countries will benefit from a tax rate of 5% on its chargeable income in excess of its chargeable income in the base year (YOA 2017/2018).

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7. Freeport RegimeFreeport operators will be liable to income tax at the rate of 3% on profits pertaining to the sale of goods on the local market.

8. Peer to Peer LendingIndividuals receiving interest income from Peer to Peer lending will be liable to income tax at the rate of 3% and they will be able to deduct bad debt and fees.

9. Carry Forward of Unrelieved Tax LossesA company will not be able to carry forward its accumulated losses if there is a change in the ownership of the company. However, it is contemplated that in the case of a manufacturing company, the latter may be allowed to carry forward its accumulated losses if the Minister deems it to be in the public interest to do so and subject to the fulfilment of conditions relating to safeguard of employment. This amendment will be deemed to be effective as from 1st July 2018.

10.Property TaxRegistration duty, land transfer tax and tax on transfer of leasehold rights in State land will not be leviable on the transfer of immovable property between a statutory body, a company where Government holds directly at least 90% of its shareholding or a wholly owned subsidiary of that company.

Free registration for transfer of a movable property between spouses.

A descendant returning back to an ascendant a property donated by the latter is exempted from payment of registration dues. This exemption will apply equally to the spouse of the descendant if the donated property was jointly owned by the spouses.

11. Tax AdministrationGeneral

Voluntary Disclosure of Income Scheme-Foreign Assets

Taxpayers will be given the opportunity to voluntarily disclose previously undeclared income held in a bank account overseas or used to purchase foreign assets. If they do so before 31st March 2020, they will not have to pay any interest or penalty on same subject to certain conditions.

Voluntary Disclosure of Income Scheme-SMEsSMEs will be allowed to regularise their tax affairs with the MRA without being subject to penalty and interest.

Assessment Review Committee-Filing of Statement of Case

The Mauritius Revenue Authority Act 2004 already catered for a statement of case to be provided alongside with representations to be lodged in the case of a review. It is now contemplated that an aggrieved taxpayer will be given sufficient time to file his statement of case and other relevant documents to the Assessment Review Committee (“ARC”). Moreover, the ARC may now proceed with the hearing of the case if the Chairperson/Vice Chairperson of the ARC is satisfied that failure to provide the statement of case is due to a reasonable cause.

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Income TaxSection 75 of the Income Tax Act 1995, which currently deals with the application of the arm’s length test, will be amended to provide for more clarity.

Value Added TaxA number of clarifications to be brought to the provisions of the VAT Act 1998:a) “ Where a local company supplies services to a foreign company who is outside Mauritius, the services will be zero-rated for VAT purposes provided the

foreign company does not in turn supply these same services to another local company.”b) “ where there is a splitting of a business entity into entities to avoid registration for VAT purposes, each entity will be required to be compulsorily registered

for VAT.” Under the current provisions, the Director-General is able to issue a direction to that person directing the split businesses shall be treated as a single taxable person which shall then be liable for registration. Now, each entity will be required to be registered for VAT purposes.

Now VAT-registered persons will be able to claim repayment of input tax in respect of (i) goodwill on acquisition of business; and (ii) the acquisition of intangible assets.

12. Global Business Companies- TaxationTax Residence

The Income Tax Act 1995 (and also the Financial Services Act 2007) will be revised to provide that a company will not be considered as tax resident in Mauri-tius if it is centrally managed and controlled outside of Mauritius.

Partial ExemptionNote that as from 1 January 2019, an income tax exemption of 80% (Partial Exemption Regime) applies to the following streams of income of Global Business Companies:

1) Foreign source dividend, provided that the dividend has not been allowed as a deduction in the source country2) Foreign source interest3) Profit attributable to a permanent establishment which a resident company has in a foreign country4) Foreign source income derived by a collective Investment Scheme (CIS), Closed End Fund, CIS Manager, CIS Administrator, Investment Advisor or Asset

Manager licensed or approved by the FSC5) Foreign income derived by a company engaged in ship and aircraft leasing

Any other income derived by Global Business Companies are taxed at the rate of 15% as from 1 January 2019.

The following have now been announced:-• Introduction of detailed substance requirements into the Income Tax Regulations 1996 that must be met in order for a taxpayer to avail himself of the

partial exemption benefit.

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• Partial exemption regime will now cover companies engaged in:

(i) in leasing and provision of international fibre capacity;(ii) reinsurance and reinsurance brokering; and(iii) the sale, financing arrangement and asset management of aircraft including aviation related advisory services.

In relation to “core income generating activities”, the companies should meet a number of conditions: (i) they should be able to demonstrate monitoring of the outsourced activities; (ii) the outsourced activities must be conducted in Mauritius and (iii) the economic substance of service providers must not be counted multiple times in relation to demonstrating substance.

Controlled Foreign Company• Rules on Controlled Foreign Company will be introduced in the Income Tax Act 1995.

(III) TOURISM: ENHANCING VISIBILITY, ATTRACTIVENESS, ACCESSIBILITY AND SUSTAINABILITY

• Rs 535 million has been allocated to the Mauritius Tourism Promotion Authority (MTPA) and an additional Rs 160 million will be allocated to redynamise the Shanghai and Kenya routes.

• The visibility of the Mauritius destination in traditional markets as well as in China, Saudi Arabia, Kenya, Scandinavian countries, Ireland and Eastern Europe will be enhanced.

• MTPA will also revive the Special Incentive Scheme which provides grants of up to Rs 200,000 to Meetings Incentives Conferences and Exhibitions (MICE) promoters and wedding planners.

• A national campaign of cleanliness and embellishment of the whole island has been announced and which should have a positive impact on the tourism destination. To encourage hotels to participate in this national campaign, a deduction of 150 percent of the expenditure incurred by hotels on cleaning, renovation and embellishment works in the public realm, from their taxable income has been proposed.

(IV) AFRICA STRATEGY AND DIPLOMACY • Building on the agreement with Mozambique towards the setting up of a regional value chain for Liquefied Natural Gas (LNG).• Development of Textile City on the 80 hectares of land in Moramanga, which the Malagasy Government has agreed to allocate to Mauritius.• Development of projects to take advantage of the Industrial and Technology Park in Naivasha, Kenya.• Consolidation of ongoing initiatives in the Special Economic Zones in Senegal, Côte d’Ivoire and Ghana.• Expansion undertaken by the Mauritius-Africa Fund of strategic partnerships with Pan-African and international multilateral development financial

institutions, such as the Trade and Development Bank, AFREXIM Bank and Fonds de Solidarité Africain in favour of cross-border financing of strategic to mobilize project finance for the benefit of Mauritian enterprises willing to expand in Africa.

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(V) FINTECH & INNOVATION1. Securing Inclusive Innovation

• To ensure inclusiveness of innovation, some 11,000 families who are on the Social Register of Mauritius (SRM), will be given totally free access to Broadband Internet.

The following measures have been announced to transform Mauritius into a Fintech hub for the region.

• Establishment of a regime for Robotics and AI enabled financial advisory services• Introduction a new licence for Fintech Service providers• Encouragement of self-regulation for Fintech activities in consultation with the United Nations Office on Drugs and Crime• Introduction of the use of e-signatures and e-licences on a pilot basis• Creation of Crowd Funding as a new licensable activity• Allowing the Financial Services Commission be allowed to regulate ‘crowdfunding’, Fintech Service Provider and Robotic Advisory Services• Amending the Regulatory Sandbox Licence Framework in relation to Fintech activities

2. Online betting

• Formulation of strategies to develop Mauritius as an online betting platform for foreigners• Issuing of a “Sandbox Licence” to enable interested parties to develop a licensing programme that would include the elaboration of an appropriate legal

framework, the choice of latest software solutions for real-time tax deduction at source for every online betting transaction and exploring risk-assessed Blockchain and Crypto Currency initiatives.

(VI) RENEWABLE ENERGY

• Establishment of a Renewable Energy Roadmap to optimise the use of the various renewable sources of energy to produce electricity and facilitate private investment in the renewable energy sector

• Removal of the imposition that a producer can produce from solar energy sources only 30 percent of the electricity it consumes

• Removal of the monthly fee for supplying electricity from solar energy sources to the national grid

• Implementation of a Waste to Energy project to allow for around 1,000 tons of municipal solid wastes to be used to generate some 20 MW of electricity.

• Installation of 75,000 smart meters over the next 3 years to replace the traditional electro-mechanical ones

• Setting up of new Renewable Energy Generation Schemes:

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i) encouraging smart cities, small and medium scale power producers and public sector entities to generate electricity from solar photovoltaic; ii) operating on a gross metering principle and eliminating the limit of 30% of consumption capacity and the connection fee.

• Installation of additional 14MW battery energy storage systems to regulate frequency and promote the integration of intermittent renewable energy on the national grid.

• Enterprises engaged in production of renewable energy in Mauritius to benefit from a reduced tax rate of 5% on the chargeable income of a bank in excess of its chargeable income in the base year if it is granted at least 5% of its new banking facilities by the bank

(VII) MANUFACTURING, AGRO-INDUSTRY AND LOGISTICS

1. Supporting the Sugar Cane Industry: Building its Long Term Resilience

• A National Biomass framework will be developed for the use of sugar cane biomass, including cane trash, for electricity generation.

2. Revitalising the Manufacturing Sector

• To maintain the export competitiveness to Europe, the “Support for Trade Promotion & Marketing” scheme is being extended for another year and an amount of Rs 120 million is being earmarked for this purpose. The said scheme will be reviewed so as to assess the possibility of extending it to cover the US market.

3. Construction Of New Airport Terminal • Construction of a new airport terminal building of about 50,000 square metres to cater for a total of 8 million passengers to cater for increase in number

of passengers

4. Improvement Of Exisiting Seaport Infrastructure

• Investment of Rs 12 billion to construct a breakwater to reduce downtime at the port during bad weather conditions• Investment of Rs 2.2 billion in another breakwater at Fort William to allow for the safe mooring of some 120 ocean-going fishing vessels thus creating a

fully functional fishing port

(VIII) HEALTHCARE• The e-health project will soon be implemented as a major reform in the public health sector so that data on the medical history of patients are available

to all hospitals across the country in real time. This will save time for patients, give them more flexibility to seek treatment in hospitals and also greatly facilitate the treatment of patients.

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(IX) RENTAL OF STATE LAND 75 % reduction in annual rent for the first 10 years of the lease for promoter implementing a private health institution or ayurvedic wellness centre project on State land.

(X) THE OCEAN ECONOMYA series of measures have been announced to give a boost to this emerging sector:

i. A four year tax holiday will be granted on income derived from bunkering of low Sulphur Heavy Fuel Oilii. Existing storage facilities will be refurbished to cater for low Sulphur Heavy Fuel Oiliii. The Mauritius Ports Authority will allow ship-to-ship bunkering

(XI) OTHER BUDGET MEASURES

1. Giving More Support to Middle Income Families Who are Investing in their Own Dwellings

A first time buyer will benefit from full exemption from registration duty on the purchase of an existing house or apartment of up to Rs 5 million instead of Rs 4 million currently, representing an additional benefit of up to Rs 50,000.

2. Retirement Savings Schemes For Our Elderly Silver Bonds

The Government will issue two Silver Bonds for the elderly to improve return on their savings and also for encouraging savings towards retirement. The salient features of the bonds are as follows:

• Only Mauritian residents 65 years and older will be eligible to purchase these bonds • The Silver Bonds will be offered an annual interest rate of 5.5%; • Bond holders will be paid interest once every quarter at a rate of 5.5% per annum; and• The bonds may be sold before maturity to the Government at par together with accrued but unpaid interest.

Retirement Savings Bond

In an attempt to encourage savings and the build-up of a steady and predictable stream of income for retirement, the Government will issue a Retirement Savings Bond (“RSB”) that reaches maturity when the holder turns 65 years of age. The main features of the RSB shall be as follows:

• Only Mauritian residents 60 years and younger will be eligible to purchase these bonds. • The annual interest on the bonds will be 5.5%; and• Bond holders will get back their capital including capitalised interest at maturity

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3. Attracting Talents from Abroad

The Economic Development Board Act 2017 will be amended to waive the capital outlay requirement of USD 40,000 under the innovator Occupation Permit for Start-ups, who will be mentored by an accredited incubator.

4. Introduction of a Significant Employers Scheme

The Economic Development Board will introduce a Significant Employers Scheme (the “Scheme”) to support businesses. The amendments will be geared to allow a foreign worker, employed by a company under this scheme, to obtain an entry permit at arrival, valid for a period not exceeding 3 months, allowing them work while the employer completes the Occupational Permit Procedure.

This Scheme will replace the Foreign Manpower Scheme to support businesses operating in fields where local talents are scarce.

5. Financial Crime Commission

In a stride to strengthen the regulatory framework to fight fraud, corruption and financial crimes so as to boost investors’ confidence in our financial services sector, the following budgetary measures was announced:

• a Financial Crime Commission will be set up to act as an apex body to combat white collar crimes, fraud and financial crimes and more importantly to ensure greater coordination and provide synergy among the various law enforcement and intelligence gathering agencies, in the likes of the Financial Services Commission and ICAC, respectively.

• The Financial Services Commission will develop a financial data handling code of conduct to address cyber risks; and

• The Bank of Mauritius, Financial Intelligence Unite and Financial Services Commission will introduce industry-wide Practice Notes with respect to handling clients’ requests.

6. Democratising Our Economy

• For micro enterprises, the maximum loan amount under the existing DBM Micro-Credit Loan Scheme has been increased from Rs 250,000 to Rs 500,000.

• The annual interest rate under the Leasing Equipment Modernisation Scheme I (“LEMS I”) and SME Factoring Scheme has been reduced from 5.5 percent to 3.9 percent.

• SME Mauritius will extend the grant of Rs 5,000 per SME towards certification under ‘Made in Moris’ label for another year.

7. Creating a New Category of Enterprises

• A major change has been brought to the grouping of our enterprises according to their size and a new category of enterprises, namely the Mid-Market Enterprises (MMEs) with annual turnover between Rs 50 million and Rs 250 million will be created

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• The Government will also introduce a line of credit facility in USD and EURO for export factoring services for the MMEs.

• Leasing Equipment Modernisation Scheme I (“LEMS II”) will be extended to the MMEs and the annual interest rate under that scheme will be reduced from 6 % to 4.25 %.

• The MMEs will also be eligible to financing under the SME Equity Fund.

8. Increasing Protection to Minority Investors

The following measures will be undertaken to afford increased protection to minority investors:-

(a) the Securities Act 2005 will be amended to ensure immediate disclosure to the public if a transaction has a value of at least 10% of the Company’s assets;

(b) the Companies Act 2001 will be amended such that individual compensations of directors are disclosed in the Annual Report;

(c) the Companies Act 2001 will be amended such that dividend declared by the Board is paid within a maximum period of 15 months subject to solvency test;

(d) the Companies Act 2001 will also allow disqualification of a director upon a successful claim by shareholders; and

(e) the SEM Listing Rules will be reviewed to provide for the requirement of obtaining shareholders’ approval for Related Party Transactions, where the percentage ratios as specified in the Rules*, represent 10% or more.

* Percentage ratios (SEM Listing Rule 13.32):-

1. Consideration to market capitalisation – the consideration divided by the aggregate market value of all the equity securities of the issuer; or2. Dilution – the number of securities issued by an issuer as consideration for an acquisition compared to those in issue prior to the transaction.

9. Improving Workers’ Rights

• A Portable Retirement Gratuity Fund will be set up and a technical committee will address the modalities for the implementation of the scheme. • Provide for a Wage Guarantee Fund which will guarantee remuneration up to Rs 50,000 to workers who lose their jobs in case of insolvency.

(XII) AMENDMENTS TO LEGISLATIONSSeveral amendments to various legislations have been announced in the Budget. Below is a summary of the main proposed amendments:-

1. Bank of Mauritius Act 2004The Bank of Mauritius Act will be amended to allow the BOM to provide facilities, including intra-day credit, to payment, clearing and settlement systems and their participants, to ensure the safety, soundness and efficiency of such systems.

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2. Banking Act 2004The Banking Act will be amended to allow the BOM to consider applications for a banking licence from a subsidiary of a bank incorporated abroad.

3. Financial Services Act 2007The Financial Services Act will be amended to:-(a) extend the scope of the offence with respect to licensees who provide false and misleading information;(b) cater for whistleblowing such that immunity is provided to any person who makes a disclosure in good faith to the FSC;(c) allow the FSC to regulate ‘crowdfunding’, Fintech Service Provider and Robotic Advisory Services.

4. Securities Act 2005 The Securities Act will be amended to:-

(a) clarify that an acquisition is significant when the value of the asset is at least 10% of the net assets of the reporting issuer;(b) provide for the authorisation and supervision of Real Estate Investment Trusts.

5. Companies Act 2001 The Companies Act will be amended to:-

(a) provide that a small private company is not qualified as a ‘Public Interest Entity’ under the Financial Reporting Act;(b) require the board of a public company to consist of at least one woman director.

6. Statutory Bodies (Accounts and Audit) Act 1972The Statutory Bodies (Accounts and Audit) Act will be amended to provide for at least one woman as member of the Board of a Statutory Body. This amendment is expected to eliminate the current underrepresentation of women on corporate boards of directors in the country, which is perceived as an injustice.

7. Insolvency Act 2009 The Insolvency Act will be amended to:-

(a) provide that an insolvency practitioner shall be ordinarily resident in Mauritius;(b) provide that a body corporate shall not be appointed or act as a liquidator;(c) allow the administrator to call separate meetings for each class of creditors who shall vote separately;(d) clarify the rules governing the insolvency of global business companies incorporated in Mauritius.

8. Definition of Beneficial Owner

The following Acts shall be amended to provide for the definition of beneficial owner to be in line with the requirements of OECD:-(a) Companies Act 2001;(b) Limited Liability Partnerships Act 2016; and(c) Limited Partnerships Act 2011.

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Disclaimer

The information contained in this Budget Brief was prepared by Perigeum Capital Ltd to provide existing or potential clients with a broad overview of the budgetary measures announced in the 2019/20 Budget, affecting the financial services sector. While all reasonable care has been taken in the preparation of this Budget Brief, Perigeum Capital Ltd accepts no responsibility for any errors it may contain, whether caused by negligence or otherwise, or for any loss, however caused, sustained by any person that relies on it. Readers are advised to consult with appropriate, qualified professional advisors before taking action.