MAURITIUS: FINANCE ACT 2022 – GUIDE

By Rajiv Gujadhur,Javed Niamut,Sheena Jowaheer Monday, August 29, 2022
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The President of Mauritius assented to the Finance (Miscellaneous Provisions) Act 2022 (Finance Act) on 2 August 2022. This follows the passing of the Finance Act by the National Assembly on 29 July 2022.

The Finance Act gives effect to the measures announced in the Budget Speech 2022-2023 ‘with the People, for the People’. An array of changes has been made, addressing the return to normalcy, rebooting the economy and implementing international tax measures, among others.

With the removal of the COVID-19 grace period, the original timeframes imposed on companies for the holding of annual meetings and preparation of financial statements have been reinstated. From this point onwards, a director has a duty to consider liquidation or administration procedures upon insolvency. Moreover, the turnover threshold of small private companies has been increased to extend the scope of companies benefitting from greater flexibility under the Companies Act.

The Finance Act implements the Pillar Two Rules of the Organization for Economic Cooperation and Development (OECD), introducing a top-up tax to ensure that a resident company forming part of a multinational enterprise (MNE) group with global annual revenues of at least EUR 750 million is taxed at a minimum rate of 15%.

Powers have also been granted to the Minister of Finance to deal with cross-border tax disputes and implement internationally agreed standards to prevent base erosion and profit shifting (BEPS). Further, in an attempt to expedite settlement of tax disputes at the Assessment Review Committee (ARC), mediation has been introduced as an alternative dispute resolution mechanism.

The amendments made to the banking sector in Mauritius reflect the Government’s commitment to strengthen banking and finance with a view to facilitating business by continuously enhancing the regulatory, institutional and good governance framework. In line with the spirit of the budgetary measures, more clarity has been brought to the specific functions of the Central Know Your Customer (KYC) and the Account Registry. The new provisions relating to confidentiality requirements aim at strengthening the duty of confidentiality imposed on a financial institution, service provider or person conducting due diligence on a financial institution for the purpose of acquiring shareholding in that institution. 

On the other hand, the broadening in the scope of powers of the central bank in relation to the National Payment Systems Act is a welcome change as previously the power of the regulator seemed restricted. The central bank may now, in addition to its existing power to vary the conditions of an authorisation or licence issued under the National Payment Systems Act, amend or cancel such conditions, or impose new conditions.

In the financial services sector, one promising change is the introduction of structured investment-linked insurance business to the Insurance Act, as an additional class of long-term insurance business. The Financial Services Commission has conducted a benchmarking exercise of the regulatory frameworks and best practices on this form of insurance business in other jurisdictions and has observed that structured investment-linked insurance business is provided under the life insurance regulatory framework. The same approach has therefore been adopted in Mauritius through the amendment to the existing regulatory framework.

Amendments have also been made to the Workers’ Rights Act (WRA) to further protect workers’ rights against termination, especially in the context of poor performance where the worker’s capacity to deliver has been affected as a result of an injury sustained in the course of work.

Please click here to access our comprehensive guide, which sets out a high-level summary of the main changes made by the Finance Act.