budget 2018-2019

Budget 2018-2019

Budget Speech

The Honourable Mr. Pravind Kumar Jugnauth, Prime Minister, Minister of Home Affairs, External Communications and National Development Unit, Minister of Finance and Economic Development of the Republic of Mauritius.
budget 2018-2019

The Global Business Sector has positioned itself as one of the pillars of the Mauritian economy and is expected to grow by 4.7% in 2018.
The financial services industry was subject to numerous challenges from the International Community (including the Organization for Economic Development (OECD) and the EU) for revamping its global business sector. It must be highlighted that the Government is fully committed to provide its support whilst emphasising increasingly on compliance with the best international norms, standards and practices.



To ensure compliance with best practices and international standards, the following measures were announced:
The introduction of a new harmonised fiscal regime for domestic and Global Business entities;

  • No GBC2 licences will be issued by the Financial Services Commission after 1st January 2019 and applicable Income Tax Act provisions will be reviewed accordingly;
  • Companies with a GBC2 licence issued prior to 16th October 2017 will be regulated under the current regime until 30th June 2021;
  • Global Business Companies will need to comply with additional substance requirements; and
  • Implementation of a new framework for the improved oversight of Management Companies

It is further noted that the Financial Services Act will be amended to:

  • rename the Category 1 Global Business Licence as Global Business Licence;
  • remove all restrictions applicable to dealings in Mauritius; and
  • a Global Business Licence must be sought with the Financial Services Commission through a Management Company by all resident companies and partnerships incorporated/registered:
  • - whose majority shareholdings are held by non-resident; and
  • - which conducts business mostly outside of Mauritius.


Currently, a GBC1 company is subject to income tax in Mauritius on its net income at 15%. It is, however, entitled to a tax credit equivalent to the higher of the foreign tax suffered or 80% of the Mauritius tax payable on its foreign sourced income giving an effective tax rate of 3%. The aforesaid tax credit will be abolished as from 31st December 2018.
A “Partial Exemption Regime” will now be introduced whereby 80% of the following specified income will be exempted from income tax:

(i) foreign source dividends and profits attributable to a foreign permanent establishment;
(ii) interest and royalties; and
(iii)  income from provision of specified financial services.
The above exemption will be granted to all companies in Mauritius, except banks, subject to the satisfaction of pre-defined substantial activities requirements of the Financial Services Commission. he existing credit system for relief of double taxation will continue to apply where partial exemption is not available.



Director fees are no longer subject to Tax Deductible at Source



These new thresholds will be effective as from income year starting on 1st July 2018, i.e. on income received by an individual as from 1st July 2018.

Income Exemption Thresholds





A. Individual with no dependent

Rs 300,000

Rs 305,000

B. Individual with one dependent

Rs 410,000

Rs 415,000

C. Individual with two dependents

Rs 475,000

Rs 480,000




D. Individual with three dependents

Rs 520,000

Rs 525,000

E. Individual with four or more dependents

Rs 550,000

Rs 555,000

F. Retired/disabled person with no dependent

Rs 350,000

Rs 355,000

G. Retired/disabled person with dependents

Rs 460,000

Rs 465,000



An individual having annual net income of up to Rs 650,000, will be taxed at the rate of 10% instead of 15%.





I. Additional Deduction for Tertiary Education

The additional deduction in respect of a dependent child who is pursuing tertiary studies will be raised as follows:
a. if abroad, from Rs 135,000 to Rs 200,000; and

b. if in Mauritius, from Rs 135,000 to tuition fees paid in a year in excess of Rs 135,000 up to Rs 175,000



A retired person who in an income year derives emoluments not exceeding Rs 50,000 will be eligible to the enhanced income exemption thresholds granted to retirees.

i.Rain Harvesting Investment Allowance

An individual investing in a rainwater harvesting system for his house will be allowed to deduct from his taxable income the total amount invested in such a system, including consultancy and design, earthworks, gutters and specialised water tanks.

ii.Interest Relief

The profit charge payable under an Islamic Financing Arrangement for the construction of a house will qualify for interest relief if the arrangement is secured on immovable property.

iii.Exempt Income

 The exemption threshold on the lump sum received as severance allowance, pension or retiring allowance will be raised from Rs 2 million to Rs 2.5 million.

The Insurance Industry Compensation Fund will be exempted from income tax.



  1. The corporate tax rate of 3% applied on profits derived by any company from export of goods will be extended to global trading activities effected by companies.



  • TDS of 3% extended to payment of commission
  • TDS on rent payable to a non-resident doubled to 10%
  •  Director fees are no longer subject to TDS



  •  Deemed foreign tax credit abolished for banks as from 1 July 2019
  •  Taxation of banks revisited with no distinction between Segment A and Segment B income.
  •  Introduction of new tax rates as follow:

    Chargeable Income

    Tax Rate

    Up to MUR1.5Bn


    Over MUR1.5Bn





The Freeport regime will be amended as follows:

(i) the corporate tax exemption granted to freeport operators and private freeport developers on export of goods will be removed;

(ii) Freeport operators and private freeport developers will continue to be exempted from the Corporate Social Responsibility (CSR) contribution;

(iii) the current tax regime will continue to apply until 30th June 2021 to companies which have been issued with a freeport certificate before 14th June 2018;

(iv) repair and maintenance of heavy duty equipment will be introduced as a freeport activity;

(v) an exhibition area being used for the purpose of vault activities will be authorised;

(vi) the 50% cap imposed on sales of goods on the local market will no longer apply;

(vii) the maximum period for warehousing of goods in the Freeport will be aligned to that of a bonded warehouse, that is 24 months. A moratorium period of 42 months will be granted on goods warehoused in the Freeport before 14th June 2018;

(viii) provision of services relating to mobile capital will not be allowed within the Freeport. The holder of a Freeport certificate, issued before 16th October 2017, may continue to provide services within the Freeport until 30th June 2021;

(ix) manufacturing activities will not be allowed in the Freeport. A transitional period will be granted to existing manufacturing companies; and

(x) enterprises outside the freeport zone will not be allowed to store goods in a freeport zone. However, authorisation already granted to a third party freeport developer to provide warehousing facilities to an enterprise outside the freeport zone for storage of goods will continue to apply until 30 June 2020.


Companies will not be allowed to offset any unused tax credit such as the foreign tax credit against CSR payable.

Companies which have been granted tax holidays will be required to contribute to CSR.



Mauritian Citizenship and Mauritian Passport
The Economic Development Board (EDB) will manage two new schemes, which will allow foreigners to apply for Mauritian Citizenship and/or a Mauritian Passport subject to satisfying due diligence requirements and defined criteria.

The criteria are:

a) Mauritian Citizenship – a non-refundable contribution of USD 1 million to the Mauritius Sovereign Fund. Spouses and dependents can also acquire Mauritian Citizenship for an additional contribution of USD 100,000 per family member; and

b) Mauritian Passport – a contribution of USD 500,000 to the Mauritius Sovereign Fund.

Spouses and dependents can also obtain a Mauritian Passport for an additional contribution of USD 50,000 per passport.

Occupation Permit for Foreign Professionals in Emerging Sectors

The EDB, through a Foreign Manpower Scheme, is facilitating the recruitment of foreign workers in emerging sectors such as Artificial Intelligence, Biotechnology, Smart Agriculture, Ocean Economy and others.

The EDB will process the application for an occupation permit within 5 days and the employer will have to contribute the equivalent of one-month salary per foreign worker recruited.

Foreign Retirees
 Foreign retirees will benefit from new fiscal and non-fiscal facilities from the Government. They will no longer be required to pay customs duties on the import of their personal effects up to a value of Rs 2 million.





The measures announced in the 2018-2019 Budget are consistent with those announced over the last few years aiming at promoting Mauritius as a Fintech Hub for the African continent. However this year, the scope around innovation has been broadened up to 3 specific areas namely Artificial Intelligence, Blockchain technologies and Fintech.    

The setting up of a Mauritius Artificial Intelligence Council and of a Steering Committee under the Prime Minister’s Office has been announced as the steps to promote the development of Artificial Intelligence.

Blockchain and crypto currencies have been the buzzwords of 2017 and it is with no surprise that two new licenses (Custodian of Digital Assets and Digital Asset Marketplace) have been announced which aim at regulating this complex environment. It is expected that the FSC, which will be the organisation granting these licenses, will put in place the necessary guidelines on investment and trading in crypto currency and digital assets.

The announcement of the Regulatory Sandbox License in the 2016-17 Budget was to cater for the promotion of Fintech in Mauritius. The license allows a flexible regulatory framework to accommodate for new Fintech solutions. Now, the announcement of the creation of a National Regulatory Sandbox License Committee to

oversee Fintech activities shows that more expert resources are being placed to accommodate for having a better understanding of Regulatory Sandbox License application from complex Fintech companies. This will hopefully create an easier and quick environment for Fintech companies to be set up and operate.

The above measures show Mauritius’ willingness to position itself as a key player in the innovation space.


Other Measures



The Captive Insurance Act will be amended to be in conformity with the substance requirements of the Organisation for Economic Co-operation and Development (OECD) Standards.


The Financial Intelligence and Anti-Money Laundering Act will be amended to allow for necessary sanctions to be imposed where a financial institution fails to comply with guidelines of the Bank of Mauritius (BoM) for the prevention of money laundering and financing of terrorism.



The Financial Services Act will be amended to:

(a) allow the Financial Services Commission (FSC) to:

  • give directions to any person as may be required, for the purposes of its functions, to ensure compliance with licensing conditions;
  • take actions against a licensee which fails to comply with section 52 or section 52A of the Bank of Mauritius Act; and
  • appoint an administrator in relation to the business activities of a person whose authorisation has been withdrawn;

(b) ensure that licensees maintain the requirements needed for the grant of a licence at all times;

(c) extend the scope of the offence with respect to licensees who provide false and misleading information;

(d) extend the scope of the offence with respect to a person who destroys, falsifies, conceals or disposes of, or causes or permits the destruction, falsification, concealment or disposal of any document, information stored on a computer or other device where such information is relevant to the Commission;

(e) clarify that the Review Panel needs to receive the application for review within 21 days of the issue of the written notification;

(f) allow for any determination of the Review Panel to be published except that any information which the Review Panel considers to be sensitive shall be omitted;

(g) allow the FSC to regulate Custodian Services (Digital Asset) and Digital Asset Marketplace;

(h) allow the FSC to regulate Compliance Services and Global Shared Services;

(i) cease the issuance of Category 2 Global Business Licence as from 1st January 2019;

(j) rename the Category 1 Global Business Licence as Global Business Licence;

(k) remove all restrictions applicable to dealings in Mauritius;

(l) provide that all resident companies and partnerships incorporated/registered under the laws of Mauritius whose majority shareholdings/parts are held by non-resident and which conduct business mostly outside Mauritius will be required to seek a Global Business Licence or an authorisation from the FSC, through a duly appointed Management Company. The latter will be responsible for Anti-Money Laundering/ Combating the Financing of Terrorism (AML/CFT), Legal, Regulatory & Corporate Governance compliance of these companies/partnerships; and

(m) provide for enhanced substance requirements for entities holding a Global Business Licence.

Consequential amendments will be made to sections in other legislations relating to companies holding a Category 1 or 2 Global Business Licence, namely, the Companies Act, Foundations Act, Insurance Act, Limited Liability Partnership Act, Limited Partnerships Act, Private Pension Schemes Act, Non-Citizens (Property Restriction) Act,

Protected Cell Companies Act, Securities Act, and Trusts Act.



The Securities Act will be amended to allow the Financial Services Commission to make Rules to cater for any new market participants for Derivatives and Commodities Market.



The Companies Act will be amended to:
(a) make provision for an offence being committed by a director for breach of duty where the director fails to disclose that he has an interest in a transaction or a proposed transaction with the company. On conviction, the Director will be liable to a fine of up to Rs 100,000 and to imprisonment for a term of up to 1 year;

(b) make provision for the Annual Report of a company to also mention any major transaction which took place during the accounting period to which it refers;

(c) provide that where the Registrar restores a company on his own motion, the requirement to give public notice in 2 daily newspapers will no longer apply to avoid unnecessary costs in relation to publication;

(d) eliminate the requirement for a certificate of current standing to contain a statement regarding payment of licence fees as same are no longer applicable;

(e) allow for disclosure and availability of Beneficial Ownership Information following enquiries related to Anti-Money Laundering/Combating The Financing of Terrorism;

(f) allow for the time for keeping the share register to be extended to 7 years following the removal of the company from the register;

(g) allow for enhanced protection to minority shareholders;

(h) allow for more transparency to shareholders; and

(i) allow for recovery of outstanding fees during liquidation process.



The Insolvency Act will be amended to:
(a) allow for specific provision for the continuation of supply of essential goods to an insolvent company throughout the insolvency process;
(b) allow for the filing of the declaration of solvency with the Director of Insolvency Service to be effected on the same date as the resolution for winding up of the company;
(c) allow for the period for which a liquidator can keep records of a company from the date of dissolution of the company to be extended from 3 to 5 years;
(d) allow for the FSC to make a petition to wind up a company which is a past licensee of the FSC to cater for situations where the licences have been terminated and the company is no longer a licensee; and
(e) review the order of payment to Mauritius Revenue Authority in the context of a receivership or a winding up.



The Limited Liability Partnership Act will be amended to provide for the:
(a) disclosure and availability of Beneficial Ownership Information following enquiries related to Anti-Money Laundering/Combating the Financing of Terrorism; and

(b) no-objection of the Mauritius Revenue Authority and the Financial Services Commission for the removal of the Limited Liability Partnership from the register.  
Sources:  Board of Investment