The new features of our law brought about by the Finance Act 2022 are set out below:
A. INTERNATIONAL FINANCIAL CENTRE
1. Financial Services Act 2007
Global Activities Licences
A new provision on ‘Global Activities’ has been introduced in the Financial Services Act 2007 (FSA). Thus, an entity which proposes to undertake ‘global activities’, (i.e. Global headquarters administration or Global shared services or Global treasury) must secure a licence from the Financial Services Commission (FSC) under the terms of Part IV of the FSA.
Approval of Officer
It is an offence under the FSA for any officer of a licensee to operate without having obtained the FSC’s prior approval under section 24 of the FSA. Under these circumstances, the Chief Executive of the FSC may refer the matter to the Enforcement Committee of the FSC for disciplinary proceedings.
Establishment of the Settlement Committee
A Settlement Committee has been established under the FSA which is an internal committee whose function is to ascertain the prospects of an early resolution of disciplinary matters with a licensee. While discharging its function and exercising its powers, the Settlement Committee shall not be subject to the direction or control of any person or authority.
2. Income Tax Act
Tax Incentives to Multinational Enterprises
The Finance Act 2022 confirms the introduction of a Qualified Domestic Minimum Top-up Tax to ensure that resident companies of large Multinational Enterprises (MNEs) are taxed at a minimum rate of 15%.
This novel tax is within the framework of the Global Anti-Base Erosion Rules developed by the Organisation for Economic Cooperation and Development/G20 Inclusive Framework on BEPS (the GlOBE Rules) which provides for a co-ordinated system of taxation intended to ensure that MNEs pay a minimum level of tax on the income arising in each of the jurisdictions where they operate. The Qualified Domestic Minimum Top-up Tax will apply to MNEs with revenue above EUR 750 million.
Taxable Income of Premium Visa Holder
This scheme applies to a foreign employer whose core business activities are outside Mauritius but employs a person who holds a premium visa and is performing work remotely from Mauritius.
Under these circumstances, the gross income attributable to the work performed by that employee in Mauritius shall be considered as income derived from Mauritius and will henceforth be taxable.
B. GLOBAL BUSINESS
1. The Companies Act
Small private company
A private company which has a turnover of less than MUR 100 million [USD2,240,000] (previously MUR 50 million)[USD1,121,000], in respect of its last preceding accounting period, shall now qualify as a “small private company”.
Furthermore, a small private company which has an annual turnover not exceeding MUR 100 million (previously MUR 20 million) may file with the Registrar of Companies (ROC) a financial summary and will be exempted from filing its annual return, unless there is a change in its shareholding or in the composition of the board or any other particulars in relation thereto.
Removal of COVID-19 provisions
The timeframes under the COVID-19 provisions have been repealed and amended as follows:
- The frequency of annual meeting of shareholders shall be:
– not more than once annually;
– not later than 6 months after the balance sheet date of the company or such other period as the ROC may determine; and
– not later than 15 months after the previous annual meeting. - The disapplication of the duty of directors during insolvency of a company in times which have been decreed by the Government as the COVID-19 period has been removed and the duties are now restored, unless as may be otherwise prescribed.
- Where a company has an obligation to prepare and file financial statements, it shall prepare the financial statements within 6 months or as may be prescribed by the ROC after the balance sheet and file them with the ROC within 28 days or such other period as the ROC may determine from signing the financial statements.
Redomiciliation and Removal of a company from the register of ROC
The ROC shall now, in addition to being satisfied that the application for removal complies with the Companies Act 2001, request the company to be registered or incorporated in another country and shall only upon receipt of the certificate of registration, remove the company from its register, as from the date of its registration or incorporation in the other country.
The grounds for removal of a company from the register of the ROC have been clarified, such that the ROC must be satisfied: (i) the company has ceased to carry on business; or (ii) the company has failed to pay its registration fees; or (iii) the company has not filed its annual return as required under section 223(2) of the Companies Act; or (iv) there is no reason for the company to continue to exist.
Restoration by ROC
Where the ROC restores a company on its register and the ROC had previously initiated proceedings for the removal of that company, it must give notice of restoration in the Government Gazette.
2. Insurance Act
New definitions in relation to Re-insurance
The Finance Act 2022 confirms that the Insurance Act has been amended to include the following in relation to re-insurance:
“clearing” means the process of transmitting, reconciling or confirming claims obligations before settlement, and the establishment of final positions for settlement;
“clearing system” –
(a) means a system which contains a set of procedures whereby insurers present and exchange information relating to the claims obligations to other insurers through a centralised system or at a single location; and
(b) includes a mechanism for the calculation of the position of insurers on a multilateral basis for the purpose of facilitating the settlement of their claim obligations;
“custodian” means a person holding a Custodian services (non-CIS) licence under the Financial Services Act or, any other person duly licensed as a custodian in an equivalent foreign jurisdiction and approved by the Commission;
“custodian agreement” means any agreement relating to the appointment and functions of a custodian, to which a structured investment-linked insurance business policyholder or the insurer and the custodian are parties;
“settlement” means the act of discharging obligations by transferring funds between 2 or more insurers;
Structured investment-linked insurance business
‘Structured investment-linked insurance business’ has been added to the list of long-term insurance and is described as the business of effecting and carrying out contracts of insurance under which the benefits are, wholly or partly, to be determined by reference to the value of, or the income from, a dedicated investment portfolio held separately for each policyholder with a custodian, and which may include the own assets and investments of the policyholder, both existing at inception and accruing over the future term of the policy, with a minimum subscription at inception in cash or assets which may be specified in FSC Rules or guidelines.
3. Securities Act
Obligation for auditors to be approved by the FSC
The Finance Act 2022 confirms that only audit firms approved by the FSC are authorised to audit the financial statements of a CIS manager or CIS. The FSC must be satisfied that that an audit firm has adequate experience, expertise and resources to audit such financial statements.
Investigation of Fraudulent behaviour the Official Exchange
The Official Exchange (i.e. Stock Exchange of Mauritius Ltd and Afrinex Ltd) may now investigate market abuses, including insider dealing and fraudulent behaviour by market participants and issuers on the Official Exchange.
4. Bank of Mauritius Act
Digital currency
The Bank of Mauritius (BOM) is entitled to issue rules to provide for the framework under which digital currency will be issued by the BOM and may be held or used by the public. The BOM may, for the purposes of issuing digital currency, open accounts for, and accept deposits from such persons as it may determine.
Establishment of Central KYC System and Central Accounts Registry
The BOM is authorised to establish
(i) a Central KYC System for facilitating the electronic verification of the identity of customers, validation and extraction of KYC records of customers by KYC institutions, and collecting KYC records submitted to KYC institutions by their customers and
(ii) a Central Accounts Registry for collecting information on accounts maintained by customers, other than the balance and amount held in these accounts (Registry).
The BOM is empowered to require any KYC institution (including financial institutions licensed by the FSC) to furnish to the Registry, on such terms and conditions as it may determine, such information as it may require for the purpose of maintaining the Registry.
5. Banking Act
Granting of Banking Licence
The criteria in relation to in-principle approval for a banking licence has been reviewed. The BOM may grant an in-principle approval for a banking licence, on such terms and conditions as it may determine, provided that all necessary documents, other than those prescribed, are submitted.
An in-principle approval granted by the BOM shall
(i) not be construed by the applicant as an authorisation to conduct banking business;
(ii) not create any legitimate expectation for a positive final determination of the application; and
(iii) automatically lapse if the applicant does not satisfy the terms and conditions attached to the in-principle approval.
C. NON-CITIZENS
Additional duty leviable on transfer of property to non-citizen
An additional duty shall now be levied on a deed, irrespective of the date on which it has been drawn up, witnessing the transfer of an immovable property to a non-citizen, approved under section 3(3)(d) of the Non-Citizens (Property Restriction) Act, at a rate of 10 % (i.e. the rate in force at the time of registration) on the value of the immovable property (excluding VAT) at the time of registration. The value of the immovable property shall be not less than USD 350,000.
The above shall not apply to immovable property acquired:
a) by a retired non-citizen who lives in the residential care home or residential unit for the rest of his life, free of rent in accordance with the Non-Citizens (Property Restriction) Act;
b) by a non-citizen or a person not resident in Mauritius who disposes of, purchases or acquires:
i) any luxury villa, apartment, penthouse or other similar properties used as residence under the Economic Development Board Act 2017;
ii) an apartment used as residence, in a building of at least 2 floors above ground floor, provided the purchase price is not less than MUR 6 million and authorised by Economic Development Board;
iii) a plot of service land for the construction of a residence from a company holding a certificate under the Smart City Scheme or Property Development Scheme prescribed under the Economic Development Board Act 2017;
iv) a residential property from a company holding an IRS certificate or a RES certificate.
D. EMPLOYMENT
1. Workers’ Rights Act
Service provider as ‘Worker’ and ‘Atypical worker’
The Finance Act 2022 confirms that the terms ‘worker’ and ‘atypical worker’ now include a service provider or by any other such appellation, whether or not he holds a business registration number, but who performs personally the same or similar work of a comparable worker employed in the same enterprise or industry. A consultant is neither a ‘worker’ or ‘atypical worker’.
Work conditions during Cyclone Warning Class III and IV
Henceforth, the provisions that relate to the work conditions when a cyclone warning class III or IV is in force as set out at section 32 of the Workers’ Rights Act shall not apply to a worker working from home.
Meal Allowance
The meal allowance as prescribed has been extended to a worker required to perform a normal day’s work of at least 10 hours.
Sick leave and leave to cater for sick child
The maximum number of accumulation (90 working days’) of outstanding sick leaves for a worker has been scrapped.
- A worker may now be granted to up to 10 days’ leave with pay for every period of 12 consecutive months, provided that the worker:
• notifies his employer on the first day of absence;
• produces the birth certificate of his sick child;
• produces, in respect of an adopted child, a certified copy of a court order and the birth certificate of the child; and
• produces, where he absents himself for more than 3 consecutive working days, a medical certificate certifying that his child is sick.
Transport and Petrol Allowance
The equivalent of the return bus fare or light rail fare shall be paid to the worker. Where a worker attends work by its own means of transport, with the approval of its employer, the employer shall pay him the equivalent of the return bus fare or light rail fare.
Where a worker is granted a petrol allowance by an employer, the allowance payable as from 1 July 2022 shall be at least 10 % higher than the allowance payable in December 2021, provided that the monthly increase in the petrol allowance does not exceed MUR 2,000.
Termination of Employment
The employment agreement shall not be terminated by reason of a worker’s performance at work being affected as a result of an injury sustained out of and in the course of work, where certified by a Government medical practitioner that he has not fully recovered from the injury.
Before terminating a worker’s agreement on grounds of the worker’s alleged misconduct, the worker shall be given an opportunity to answer any charge made against him/her in writing, in an oral hearing or in an oral hearing following her/his written explanations.
In relation to termination by an employer in cases of misconduct that is subject to criminal proceedings, it has been specified that the worker should be in employment or under suspension when the employer becomes aware of the conviction of the worker by the court of first instance in respect of the alleged misconduct which was the subject of criminal proceedings.
Reinstatement
Where an employer terminates the employment of a worker for any reason, other than those related to reduction of workforce or closure of enterprises, the worker may, instead of claiming severance allowance, register a complaint with the supervising officer to claim reinstatement. The supervising officer may, where he believes that the worker has a bona fide case for reinstatement, refer the matter to the Employment Relations Tribunal.
Redundancy
The Redundancy Board is now empowered to make an order for the employer not to reduce his workforce or close down his enterprise where it finds that the reasons of notification under the Workers’ Rights Act are unjustified.
Where the employer has failed to comply with an order of the Redundancy Board, the latter shall with the consent of the worker, order the employer
(i) to reinstate the worker in his former employment, with payment of remuneration from the date of termination to the date of his reinstatement or
(ii) pay the worker severance allowance.
Any settlement reached by the parties following conciliation or mediation conducted by the Redundancy Board shall be enforced in the same manner as an order of the Industrial Court.
Sexual harassment
The definition of ‘sexual harassment’ set out in the Equal Opportunities Act has been implemented in the Workers’ Rights Act as follows:
A person sexually harasses another person where, in circumstances in which a reasonable person would have foreseen that the other person would be humiliated, offended or intimidated, he –
(a) makes an unwelcome sexual advance, or an unwelcome request for a sexual favour, to another person; or
(b) engages in any other unwelcome conduct of a sexual nature towards another person.
For the purposes of paragraph (b), “conduct” includes making or issuing an unwelcome oral or written statement of asexual nature to a person or in the presence of a person.
Complaints by employees
Any worker may make a complaint to the supervising officer against his employer or any agent of the employer, in respect of any matter arising out of his employment, who may in turn refer the matter to the Commission for Conciliation and Mediation.
2. Social Contribution and Social Benefits Act 2021
CSG and Social Benefits
A non-citizen who holds a premium visa issued by the passport officer on the recommendation of the Economic Development Board is exempted from paying social contribution under the Social Contribution and Social Benefits Act.
Retirement Benefit
The monthly retirement benefit is reduced from MUR 4,500 to MUR 1,000 for the months of July 2022 to June 2023 while the monthly retirement benefit as from 01 July 2023 will be MUR 4,500. The residence period in Mauritius for a person to be eligible for the retirement benefit has been amended to 20 years to 12 years in aggregate since his eighteenth birthday.
Disability and Income allowances
New allowances are now payable:
1. Disability allowance: A person shall be entitled to a disability allowance of MUR 2,500 or such other amount as may be prescribed where he
(a) suffers from a disability
(b) is under the age of 60 years and
(c) is not in receipt of a basic pension under the National Pensions Act. Disability is defined as a loss of physical faculty of not less than 40% and not exceeding 59% due to an injury or medical condition specified in the Sixth Schedule of the Social Contribution and Social Benefits Act;
2. Income allowance: A monthly allowance of MUR 1,000 shall be paid by the Mauritius Revenue Authority (MRA) to any eligible individual directly in his/her bank account at the beginning of each month from July 2022 to June 2023. The individual must be an employee or a self-employed person deriving income not exceeding MUR 50,000.
3. Income Tax Act
Prime a L’Emploi Scheme
An employer shall, in respect of every employee taking employment from 01 July 2022 to 30 June 2023, apply to the MRA, within 15 days from the date the employee takes up employment, for approval of the employee as an eligible employee. The MRA shall, in respect of every approved eligible employee, pay to his employer an allowance equivalent to the basic salary of that employee for that month (not exceeding MUR 15,000) in the month he is employed and in the next 11 consecutive months. This scheme shall only apply to the first 10,000 employees who are eligible employees and in respect of whom an application has been made to the MRA.
An eligible employer means an employer established in Mauritius and includes a company, société, an association, trust, foundation, co-operative, approved/registered charitable institution, charitable trust or charitable foundation, religious body, an individual who is an employer. It excludes a Ministry, a Government department, a local authority, a statutory body or the Rodrigues Regional Assembly, a public enterprise, a person employing only household employees and such category of employer as may be prescribed.
An eligible employee means a person employed on a full-time basis by an eligible employer and
(i) is a citizen of and is resident in Mauritius;
(ii) on the date the person takes up employment, is above 18 years and less than 35 years (for male) or 50 years(female);
(iii) the person was not employed for a period of at least 6 months prior to the date on which the person takes employment with an eligible employer and
(iv) whose monthly basic salary does not exceed MUR 50,000. A person undergoing training or a household employee is excluded.
Financial assistance to employers
The current financial assistance to employers for payment of salary compensation 2021 and 2022 under section 150D of the Income Tax Act has been amended as follows:
• from January 2021 to December 2021, an allowance equivalent to MUR 375 to every employer, except for export enterprise, where the allowance shall be MUR 235; and
• from January 2022 to June 2022, an allowance equivalent to MUR 375.
A new provision has been introduced to extend the financial assistance for payment of salary compensation for the year of 2022 has been extended to the tourism industry.
E. AML/CFT LAWS
1. Prevention of Corruption Act
Foreign public official
Bribery by or of a foreign public official has been criminalized as follows:
• A foreign public official who solicits, accepts or obtains from a person, for himself or for any other person, a gratification
(a) for the foreign public official to use his position to do an act or to refrain from doing an act in the execution of his functions or facilitated by his functions; or
(b) in order to provide business or any advantage to a person, shall commit an offence and shall, on conviction, be liable to penal servitude not exceeding 10 years
• Any person who promises to give, or who offers or gives to a foreign public official a gratification, as mentioned above shall, on conviction, also be liable to penal servitude not exceeding 10 years
‘Foreign public official’ is a person who –
(i) holds a legislative, an executive, an administrative or a judicial office in a foreign country, whether by way of appointment or election; (ii) performs a public function for a foreign country, or for a foreign public agency, public enterprise or public company, or an official or agent of a public international organisation namely, an international civil servant or a person who is authorised by the organisation to act on behalf of the organisation. This includes a public agency, public enterprise or public company.
Non-tax deductibility of bribes
No person shall, in his tax return to the MRA, deduct from his turnover or income, any sum which has been given, directly or indirectly, as a bribe and shall commit an offence and shall, on conviction, be liable to a fine of not less than MUR 50,000 but not exceeding MUR 1 million and to imprisonment for a term not exceeding 2 years.
2. United Nations (Financial Prohibitions, Arms Embargo and Travel Ban) Sanctions Act
‘International terrorism’ has been introduced as including:
(a) terrorist acts that go beyond national boundaries in terms of the methods used, the people who are targeted or the places from which the terrorists operate;
(b) violent or criminal acts committed by individuals or groups that are inspired by, or associated with, foreign terrorist organisations.
F. MISCELLANEOUS
1. Land (Duties and Taxes) Act
Land transfer tax shall also be levied where leasehold rights in State land are transferred through acquisition by a company of its own shares by way of redemption, buy-back or in any other manner where such acquisition results an effective change in ownership of that company.
Land transfer tax and registration duty shall be also levied where a company holding immovable property acquires its own shares by way of redemption, buy-back or in any other manner which results in an effective change of ownership of that company. The exemption of duties in relation to transfer of shares by a company as provided under section 45A of the Land (Duties and Taxes) Act shall still apply.
2. Exemption from registration duties
Part III of the First Schedule of the Registration Duty Act, in relation to documents that are exempted from any registration duty, now includes a deed witnessing the lease of land to a lessee, holder of a Transit Oriented Certificate issued by the Economic Development Board under the Transit Oriented Scheme, provided that the lessee uses the land to develop a project approved by the Economic Development Board under the scheme.
3. Electronic submission of deed or document bearing digital signatures
A deed or document submitted electronically to the Conservator of Mortgages/Registrar General, which has been signed digitally by the parties in conformity with section 19 of the Electronic Transactions Act, shall be deemed to meet the requirements and to reproduce the contents of the original deed or document
CONCLUSION
Clearly, amidst the current uncertain and unprecedented times which the global village has witnessed, the Mauritian Government has pursued its strategy for building a resilient economy, adaptation and, sustainability by further arming its international financial centre and the nation with the tools to achieve self-sufficiency and be future ready’. This is the new normal.
