On 02 June 2023, the Minister of Finance, Economic Planning and Development (Minister of Finance) tabled the National Budget for the fiscal year 2023-2024 under the theme “To Dare & to Care”. The Minister of Finance declared that now that the economic downturn brought about by the COVID-19 pandemic was over, the time had come for us to “continue building the future we want together.” In his vision, this would be achieved through three pillars namely, (a) strengthening the foundations of the Mauritian economy (b) continuing to transform Mauritius into a sustainable economy; and (c) building the future that Mauritius deserves.
A highlight of the relevant measures for the Mauritius International Financial Centre is set out below and demonstrates its continued approach to last year’s National Budget.
STRENGTHENING THE MAURITIAN ECONOMY – THE MAURITIUS INTERNATIONAL FINANCIAL CENTRE
Family Offices
Taking on from last year’s National Budget, the Government of Mauritius ambitions to capture (i) family offices and wealth management within the purview of the Variable Capital Companies Act (‘VCC Act’) and (ii) wealth manager and family office licence under Private Banking. The overall result is that both open-ended and closed-end structures will now be captured under the VCC Act thereby opening the Mauritian jurisdiction to a wider class of assets.
FINANCIAL SERVICES COMMISSION & THE FINANCIAL SERVICES ACT
In its continued commitment to combat money laundering and counter the financing of terrorism, the Government of Mauritius will amend the Financial Services Act (‘FSA’).
The underlying principle is to further align Mauritius with international standards and best practices on Anti Money Laundering and the Countering of Financing of Terrorism. In this regard, the Minister of Finance has announced that the following measures are envisaged:
- amend existing legislation to reinforce the existing AML/CLT framework by defining the terms “AML/CFT’ and “AML/CFT legislation” and, clarifying that certain entities do not fall within the scope of the Financial Intelligence and Anti-Money Laundering Act namely, Fintech Service Providers, reinsurance companies, brokers, travel insurance, health insurance, actuarial services, credit rating agencies and insurance salespersons;
- request the assistance of the World Bank for an assessment of the financing risks linked with money laundering and terrorism financing through a National Risk Assessment;
- an independent assessment to be undertaken regarding the effectiveness of the Mauritian AML/CFT framework ahead of the ESAGAMLG evaluation of 2025;
Importantly, the powers of the Financial Services Commission (‘FSC’) will be enhanced both in respect of its administrative and regulatory powers as follows:
Regulatory
- breach of the AML/CFT legislation will be sufficient to trigger both the enforcement powers of the FSC but also to action a referral to the Enforcement Committee;
- enact rules regarding the obligations and responsibilities of companies granted a management licence by the FSC;
- enact rules on the establishment of a register for Virtual Assets to record providers of virtual assets;
- it will be empowered to enter into arrangements with and extended its assistance to a foreign supervisory institution on the caveat that the institution complies with confidentiality measures determined by the FSC; and
- moneylenders will be required to comply with FSC requirements.
Administrative
- the FSC will not be time-barred when recovering annual fees and late charges due to it;
- licensees will be under an obligation to submit independent compliance reports to the FSC;
- sanctions for non-payment of administrative penalties will be aligned with the non-payment of licence fees.
An innovative feature of other amendments envisaged for the FSA is that the powers of the Ombudsperson for financial services will henceforth exclude financial services which are not licensed by the Bank of Mauritius and the FSC.
TAXATION – SECURITIES ACT, PROTECTED CELL COMPANIES ACT & VCC ACT
Renewable Energy Projects
Securities Act
The Minister of Finance announced that funds will be authorized to invest on loans or similar debt instruments following amendments to the Securities Act.
Furthermore, he announced that the partial exemption to open ended funds and closed-end funds will be increased by which the effective tax rate for these entities will be brought down to 0.75%.
On a related note, the Minister of Finance announced that in line with the Government’s sustainability agenda and to promote the greening of the economy, the Government of Mauritius will extend the exemption of interest derived from income generated from bonds to finance renewable energy projects to all sustainable projects. In the same breath, the Bank of Mauritius will develop a Carbon Trading framework for both blue and green credits.
Protected Cell Companies Act & Variable Capital Companies Act
The Minister of Finance announced that each cell-sub-fund or special purpose vehicle will henceforth be treated by the Mauritius Revenue Authority as a separate entity for tax recovery purposes in order to ensure that the liabilities of a cell or sub-fund is not extended to other cells or sub-funds or special purpose vehicles of the same company.
ELECTRONIC MONEY INSTITUTION
As a further step to authorising digital currency, the National Budget 2023-2024 provides for the setting up of Electronic Money Institutions and the adoption of a legal framework for digital signatures.
The Minister of Finance went further and confirmed that the Government of Mauritius had given effect to recent comments from the Governor of the Bank of Mauritius and that the Digital Rupee would become a reality around November 2023 on a pilot basis.
VIRTUAL ASSET AND INITIAL TOKEN OFFERING SERVICES ACT
The Minister of Finance announced amendments to the VAITOS Act as follows:
- authorise a Virtual Asset Custodian to hold custody of security tokens; and
- ease applications for initial token offerings by removing the requirement for an approval letter issued by a virtual asset exchange or an equivalent acceptable to the FSC.
CONCLUSION
As the global village continuously seeks ways to emerge from the aftermaths of the ever prevalent Covid-19 and the Russia- Ukraine conflicts, the Government of Mauritius reminds us the resilience and self-sufficiency are fundamental to forge the ‘new’ future in our on-going endeavor to understand the ‘new normal’. The measures may be less drastic that what Mauritius has witnessed in the previous years and is a continuation of what was already in place for Mauritius to survive.
For further information, please contact:
Sharmilla Bhima, Partner, Appleby
pbhima@applebyglobal.com
