Skip to main content

Mauritius Budget Brief 2019/20: No surprises, but moving ahead with confidence

Back Arrow Back

Mauritius Budget Brief 2019/20: No surprises, but moving ahead with confidence

Fazeel Soyfoo, Director - Tax, shares his opinion on the Mauritius Budget 2019/20, with emphasis on the implications for the financial services sector.

Click here to read this article in French.

The National Budget was presented by the Hon. Pravind Kumar Jugnauth, Prime Minister and Minister of Finance and Economic Development, on 10 June 2019, in what was the last budget of the Government’s mandate before the next general elections. As expected, it featured a generous dose of measures aimed at social development and improvement of the quality of life.

Amidst continued global economic uncertainties fuelled by events such as Brexit and escalating international trade wars, the Government highlighted the resilience of the economy as forecast growth rate in 2020 is expected to rise to 4.1% from 3.9% in the current year. With the unemployment rate almost at a twenty-year low and inflation well under control, the economic fundamentals look sound. Nonetheless, the level of public debt remains a concern.

Ten avenues are highlighted in the Budget to “embrace a brighter future”, through a mix of consolidation, expansion, infrastructure building as well as socio-economic and regional integration.

The Financial Services sector is identified as one of the fastest growing areas of the economy, with the Government committed to enhance the integrity and reputation of the Mauritius International Financial Centre, whilst seeking to expand the accessibility of products and diversifying the product base. The development of new rules and an attractive tax regime for Real Estate Investment Trusts (REITs) is welcome, as is the agreement between the FSC and the Gujarat International Finance Tec-City (GIFT) to recognise Mauritian licensed funds and management companies as qualified to operate in the GIFT. In line with previous Budgets, the Government continues to embrace the development of innovative sectors such as fin-tech and eCommerce.

The measures announced in the field of fund administration indicates a strong commitment to facilitate the setting-up of funds in Mauritius within the shortest possible time frame, and to make Mauritius a reliable and cost-effective fund administration platform. The new regulations on crowd-funding should allow Mauritius to emerge as a fund jurisdiction which has fully embraced the era of democratisation of sourcing of investors whilst enabling impact investment in the region.

The establishment of the Financial Crime Commission to ensure that Mauritius remains compliant with all international legislations on anti-money laundering. The combatting of terrorist financing is also an important initiative as part of the Government’s broader agenda to be a clean and safe platform to facilitate cross-border investment and trade into Africa.

Having broken into the top 20 globally in the World Bank’s Ease of Doing Business, the Government is intensifying efforts to improve the business environment for investors through a series of new facilitation measures and alignment to international best practices. Whilst there were no major changes to the fiscal regime, the Budget introduced a number of encouraging measures to improve tax administration.

Overall, the outlook for the country remains positive, as the transformative journey continues. This bodes well, especially for international investors and the wider business community as Mauritius seeks to cement its position as a strategic player for trade and investment in the region. We hope that the measures announced and described below will be implemented efficiently and effectively so that the benefits can be felt sooner rather than later.

Ten Avenues to Embracing a Brighter Future together as a Nation

  1. Strengthening the pillars of economic growth
  2. Consolidating the productive sectors while shaping a more democratised  economy
  3. Expanding the economic space while deepening regional integration
  4. Building the infrastructure that matches the country’s development vision
  5. Deepening the national reform agenda
  6. Reaching a higher social development path with a focus on gender mainstreaming and improving quality of life
  7. Promoting a safer and more secure living environment
  8. Facing the challenge of climate change and further building the resilience of the environment
  9. Building stronger foundations for the infrastructural development of Rodrigues, Agalega and Outer Islands
  10. Securing sound public finances and sustainable development


Expanding on these points, we examine the five key areas critical to the Budget's success:

Financial grey icon

Financial Services

Expanding accessibility of financial products

  • Establishment of a new framework for fund administration and fund management.
  • Revamping the existing Special Purpose Fund regime to ease access to new markets.
  • The Financial Services Commission (“FSC”) will be 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.

Diversification of the product base

  • Announcement of new rules and an attractive tax regime to promote the development of Real Estate Investment Trusts (“REITs”).
  • Wealth management activities: creation of an ‘umbrella licence’ for wealth management activities.
  • Creation of a scheme for headquartering of ‘e-commerce’ activities.
  • Announcement of 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.
  • Creation of 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.

Developing the Financial Services Sector

A number of measures have been announced as part of the development of the Financial Services Sector:

  • The Bank of Mauritius (BOM) and the FSC will explore the convergence of private banking and wealth management licences.
  • The partial income exemption regime will be extended to cover companies engaged in leasing and provision of international fibre capacity, companies engaged in reinsurance and reinsurance brokering as well as those engaged in the sale, financing arrangement and asset management of aircraft and its spare parts, including aviation related advisory services.
  • The limit on the number of shareholders permitted for private companies incorporated under the Companies Act will be reviewed.
  • The Financial Services Act will be amended to introduce a scheme for the Head Quartering of E-Commerce activities in Mauritius.
  • The Economic Development Board (EDB) will pursue consultations with the United Nations Office on Drugs and Crime (UNODC) and relevant stakeholders with a view to proposing appropriate amendments to the Economic Development Board Act to upgrade the Regulatory Sandbox Licensing Framework for Fintech Activities.

Changes to the Financial Services Act

The following measures have been provided under the Financial Services Act:

  • The setting up of a Financial Crime Commission to carry out investigations and take measures to suppress financial crimes.
  • The powers of the FSC will be upgraded to allow the FSC to:
  1. Appoint an administrator if it has reasons to believe that the conditions attached to a license are no longer being met.
  2. Have more independence in exercising its duties.
  3. Have access to data or program and be able to extract files, documents or records held electronically.
  4. Have wider scope when conducting an investigation.
  5. Issue directions with immediate effects to prevent any prejudice on clients of licensees.
  6. Provide immunity protection to whistleblowers who makes disclosure to the FSC.
  • The Financial Services Review Panel shall be independent and empowered in such a way that it will no longer require the approval of the FSC regarding the format and manner of the applications made to the panel as well as any publications it releases regarding its determinations.

Bank of Mauritius Act

The Bank of Mauritius Act will be amended to allow the BOM to seek the collaboration and co-operation of the FSC and any other agency for the establishment of the Central KYC Registry.


Operation grey icon

Enhancing the business environment

A new Business Facilitation Bill will amend 26 legislations to build on the recent progress in the World Bank Ease of Doing Business ranking. The amendments will, among others:

  • Expedite the start of businesses.
  • Eliminate unnecessary licences and permits.
  • Expedite clearances at the port and airport and.
  • Align with international best practices regarding protection of minority investors and sharing of information.

The Budget announced a series of measures that will be implemented to further improve the business environment for the investors and foster further economic development. The measures will include:

Facilitating start of businesses and implementation of projects by:

  • Reviewing the process of payment of trade fees.
  • Ensuring efficiency and higher degree of compliance with construction permitting.
  • Streamlining of licensing procedures.
  • Reviewing the processing of applications for work and residence permits by foreign nationals.

Trade Facilitation

  • Facilitating issue of import and export permits.
  • Reviewing clearance fees for ‘Other Tea Products’.
  • Working under one roof at Customs Office.
  • Providing enough time to freight forwarding Agents for customs formalities.
  • Maritime Single Window.
  • Measures targeted towards the improvement of the Logistics Performance Index.

Alignment to International Best Practices

  • Increasing protection to Minority Investors as recommended by the World Bank.
  • Resolving insolvency.
  • Sharing of information to expedite Doing Business.
  • Introducing Regulatory Impact Assessment for Business-Related Rule Making will be established in collaboration with the Organisation for Economic Co-operation and Development (“OECD”) and funded by the EU.
  • Expediting Dispute Resolutions.


Accounting grey icon


Tax Residency of Companies

The Income Tax Act will be amended regarding the determination of tax residency for companies so that a company shall not be considered as tax resident in Mauritius if it is centrally managed and controlled outside Mauritius. Consequential amendments will be made to Section 71A of the Financial Services Act.


The Income Tax Regulations 1996 will be amended to include additional conditions that will need to be satisfied by a taxpayer, to be eligible for the partial exemption regime. These changes will include:

  1. The details on the substance requirements.
  2. The conditions to be satisfied in case a company outsources its core income generating activities, namely:
  • the company must be able to demonstrate adequate monitoring of the outsourced activities
  • the outsourced activities must be conducted in Mauritius; and
  • the economic substance of service providers must not be counted multiple times by multiple companies when evidencing their own substance in Mauritius.

Partial exemption

Furthermore, the partial exemption regime will be extended to cover income derived by companies engaged in the following sectors:

  1. Leasing and provision of international fibre capacity.
  2. Reinsurance and reinsurance brokering services. 
  3. Financing arrangements and asset management of aircraft and its spare parts, including aviation related advisory services.

Anti-abuse rule

The Income Tax Act will be amended to set out rules on controlled foreign companies (CFC).

Transfer Pricing

The legal provision relating to the arm’s length test will be fine-tuned to bring further clarifications on its application.

The Freeport Regime

A freeport operator who carries out manufacturing activities in the freeport and who undertakes to build, develop and manage its own infrastructural activities will be entitled to apply for a Private Freeport Developer License.

A freeport operator or Private Freeport Developer engaged in the manufacturing of goods who supply goods in the local markets shall be subject to tax at a reduced rate of 3% on the profits derived from such sales.

Existing manufacturing companies issued with a freeport certificate will have to meet the following substance criteria:

(i) Employ a minimum of 5 employees; and

(ii) Incur an annual expenditure exceeding Rs 3.5 million.

Freeport Operators will be liable to pay Corporate Social Responsibility (CSR) on sale of goods on the local market.

Income Tax holidays

The Government has announced a number of tax holidays for different sectors:

  • A 4-year tax holiday granted on income derived by companies engaged in the bunkering of low sulphur heavy fuel oil.
  • An 8-year tax holiday for new companies engaged in the development of a new marina.
  • An 8-year tax holiday for newly set-up companies engaged in innovation-driven activities on income derived from its intellectual property assets developed in Mauritius and existing companies on income derived from intellectual property assets developed in Mauritius after 10th June 2019, subject to satisfying pre-defined substantial activities requirement in compliance with the Base Erosion and Profit Shifting (BEPS) Action 5 report.
  • A 5-year tax holiday to companies that will set up an e-commerce platform, prior to 30th June 2025.
  • A 5-year tax holiday to peer-to-peer lending operators provided the operations are carried out prior to 31st December 2020.

Accelerated Depreciation

Full depreciation will be allowed on Plant and Machinery costing not more than MUR 60,000.

Unrelieved Tax Losses on change in Ownership

Any company facing financial difficulties, which proceeds with a change in ownership, will now be able to carry forward its accumulated tax losses, subject to satisfying certain conditions.


Solutions grey icon


Developing the innovation eco-system

The Government has announced the following measures to develop the Innovation Eco-System:

  • Injection of seed capital of Rs100 million in the National Innovation and Research Fund.
  • The Université of Mascareignes to offer a Masters in AI and Robotics in collaboration with Université de Limoges and Université de Nice.
  • The HRDC to set up a 6month AI Skills Development Programme for 100 students.
  • A “PostStudy Work Visa” introduced to allow international students to work for 3 years in Mauritius in sectors such as ICT, Fintech, AI and biotechnology.
  • Promotion of Mauritius as a Fintech hub by establishing a regime for Robotics and AIenabled financial advisory services.
  • Introduction of a new licence for Fintech Service providers.
  • Introduction of the use of esignatures and e-licences on a pilot basis.
  • Creation of Crowdfunding as new licensable activity.

Expanding the economic space to deepen economic diversification

  • To further expand the production space of Mauritius beyond the country’s frontiers in partnership with other African countries, the Government has announced that it will:
    • Build on the agreement with Mozambique towards the setting up of a regional value chain for Liquefied Natural Gas.
    • Develop a textile city on the 80 hectares of land which the government of Madagascar has agreed to allocate to Mauritius.
    • Develop projects de take advantage of the Industrial and Technology Park in Naivasha, Kenya.
    • Consolidate the on-going initiatives in the Special Economic Zones in Senegal, Côte d’Ivoire and Ghana.
  • The Mauritius Africa Fund will further expand its strategic partnership with pan-African and international multilateral development financial institutions to mobilise finance for the benefit of Mauritian enterprises willing to expand in Africa

Building the infrastructure that matches the Country’s development vision

  • The Master plan provides for construction of a new airport terminal to cater for a total of 8 million passengers.
  • Aircraft parking capabilities to be increased to accommodate 22 wide-bodied aircrafts simultaneously.
  • Extension of cargo and freeport area towards Rose-Belle Industrial Park to accommodate light industries.
  • Investments in port to expand its capacity, boost its productivity and competitiveness.
  • Extension of the Metro Express beyond the Port LouisCurepipe corridor.


Administration grey icon


Promoting gender equality and women empowerment

The Companies Act will be amended to require public companies and statutory bodies to have at least one woman on their board of directors.

Facing the challenge of climate change and further building the resilience of the environment

  • The Government announced a Renewable Energy Roadmap that will facilitate private investment in the renewable energy sector.
  • Implementation of a Waste to Energy project.
  • Set up of a Centralised Cleaning Coordination Committee. That committee will work on a comprehensive Waste Recycling Programme.

Definition of Beneficial Owner

The Companies Act 2001 and the Limited Liability Partnerships Act will be amended in order to provide for the definition of Beneficial Owner, which should be in line with the requirements of the OECD.

The Protection of the Minority Investors

The following measures have been announced as a means to protect minority investors, in accordance with the recommendations of the World Bank:

  • Disclosure of individual compensation of Directors in the annual report
  • Dividend declared to be paid within a period of 15 months, subject to meeting the solvency test
  • Requirement for shareholder’s approval for related party transactions representing 10% or more of the total assets of the company
  • Disqualification of a Director following a successful claim made by the shareholders and
  • Immediate disclosure of transactions representing at least 10% of the value of a listed company.

Protection afforded to creditors during Insolvency

The Insolvency Act will be amended to allow an administrator to call for separate meetings for different classes of creditors. The same benefits will need to afforded to the creditors, as they would have been entitled in case of a liquidation.


    In light of the Budget, if you have any questions please do not hesitate to contact Fazeel using his details below; or to view our Mauritius service offering, click here.

    You may also like

    24 May 2019

    Reading time: 5 minutes

    Johannesburg Ocorian Forum discusses role of IFCs in promoting South African business

    Following hot on the heels of the Mauritius, Côte d’Ivoire<

    Read more

    30 May 2019

    Reading time: 8 minutes

    AfCFTA: How will it affect Mauritius and Africa?

    The Africa CEO Forum held in Kigali recently was an opportunity to reflect on the progress of the ...

    Read more

    31 October 2018

    Reading time: 8 minutes

    Mauritius - Africa's investment hub

    As a renewed 'scramble for Africa' sees foreign investment pouring into the continent from governm...

    Read more