The Mauritius Budget 2023-2024, presented by Dr The Hon. Renganaden Padayachy and enacted on 20 July 2023, aims to strengthen and sustain the island’s economy based on the significant economic progress achieved last year.
Mauritius is among the top 20 fastest-growing economies globally, according to the IMF’s World Economic Outlook report in April 2023, indicating a robust recovery post-pandemic. “In 2022, the Mauritian economy grew fastest in over 35 years, 8.7% compared to an initial forecast of 7.2 %. Our GDP exceeded earlier estimates by MUR 26bn to reach MUR 570bn. The foreign direct investment totalled MUR 27.7 bn, 50 % higher than in 2021. Total investment exceeded expectations by MUR 10bn to reach MUR 113bn, a 20 % increase compared to 2021. Exports of goods and services amounted to MUR 320bn, representing an increase of MUR 4bn over earlier estimates and a surge of MUR 110bn compared to 2021.”
Real estate activities contributed to the increase in FDI
The Economic Development Board (EDB) elaborated further in a subsequent newsletter, noting that France and South Africa were the primary market sources for the increase in FDI. “Real estate activities account for 54.7% of gross direct investment flows, followed by Education (13.4%)… The real estate sector in tandem with the construction sector offers diversified asset classes and are well positioned in the global property market. In 2022, private sector investments in the construction and real estate sectors stood at MUR 38bn. In contrast, in the real estate sector, FDI witnessed impressive growth with over 600 sales in regulated schemes amounting to MUR 15.4bn.”
According to the Bank of Mauritius, gross direct investment flows were estimated at MUR 18,2m for the first three quarters of 2022, compared to MUR 8,5m for the corresponding period in 2021. Gross direct investment in Mauritius was mainly sourced from France (22.8%), South Africa (12.8%), and the UK (5.6%).
New rules for foreign nationals to buy property
Changes to the Immigration Act and Non-Citizens (Property Restriction) Act include providing a residence permit to retired non-citizens aged 50 years and above, along with their families, upon acquisition of a property within a Senior Living segment of a Property Development Scheme (PDS) project. The real estate purchase price must be more than USD 200,000. This revision will be retroactively applied from 27 April 2019. The residency status will remain valid if the property remains in the buyer’s possession.
Additionally, resident non-citizens will now have the option to procure residential properties outside existing schemes (Smart City and PDS), but this will necessitate an additional registration fee of 10%. The minimum value of such acquired properties will be increased to USD 500,000 (previously USD 350,000), and the area must not exceed 1.25 acres. However, this privilege is solely available to the primary holder of the resident or occupation permit and does not extend to their spouse or children.
As for the Smart City Scheme or PDS project promoters, the current provision allows them to vend a single plot of serviced land, not exceeding 2,100 sqm, to non-citizen holders of an occupation permit, permanent residence permit, or residence permit. This allowance will be extended by two more years until 30 June 2026.
Non-Citizens (Property Restrictions) Act
Legal firm BLC Robert & Associates explains that the Act now clarifies the conditions in which a non-citizen, a resident under the Immigration Act 2022, is not required to hold a certificate before acquiring a property. “These conditions are as follows:
– the non-citizen has not acquired the status of resident by him being the spouse, dependent child, parent or other dependent of the holder of a permit under the Immigration Act 2022;
– only one property is purchased or otherwise acquired by the non-citizen;
– the purchase price is not less than USD 500,000 or its equivalent in any other hard convertible foreign currency, or in such other amount as may be prescribed; and
– any additional duty leviable under the Registration Duty Act is paid.”
Living and working in Mauritius
Dr Padayachy announced significant reforms to the Mauritius migration policy to encourage foreign talents to contribute to the growth and development of the economy.
To that end, the threshold for the occupation permit for professionals will be reduced to MUR 30,000. Those who apply for an occupation permit will be allowed a business visa of 120 days without having to leave Mauritius. Moreover, it won’t be conditional on having a local bank account.
A ‘silent consent’ provision of four weeks will be introduced to register foreign professionals with professional bodies.
Meanwhile, a new three-tier system will be introduced allowing companies with a good track record to benefit from a streamlined process to recruit foreign labour under a work permit. The ‘silent consent’ provision will also apply to work permit applications. Non-citizens on a tourist or business visa can apply for a work permit.
New rates of income tax
Modifications to the Income Tax Act involve eliminating the uniform 15% tax rate and replacing it with a tiered structure that varies according to an individual’s annual chargeable income. This new framework ranges from 0% for the initial MUR 390,000 to a maximum of 20% for earnings exceeding MUR 500,000. The previous income exemption thresholds no longer apply, allowing for expanded avenues for personal reliefs and deductions before the computation of chargeable income. Furthermore, the provisions of the solidarity levy on individuals within the Income Tax Act have been revoked.
Dheerend Puholoo, Tax Leader at PwC Mauritius, says the new Budget is intended to make Mauritius an even more competitive and attractive destination to work. “We will now move to a progressive tax system to make it more equitable and fairer for taxpayers. This represents a major reform to the long-standing flat rate system. What is also significant is the abolition of the solidarity levy [imposed on individuals earning a leviable income of more than MUR 3m], which undermined the competitiveness of Mauritius.”
BLC Robert & Associates stated in a newsletter, “In a climate of post-COVID economic recovery but also high inflation, the measures adopted in the Finance Act 2023 provide encouraging signs for boosting economic activity whilst at the same time improving the conditions of the Mauritian population.”
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