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Budget Webpost

Financial Services Sector: 2017 – 2018

We are delighted to provide you with a special edition of Temple Insights following the annual Budget 2017 – 2018, delivered yesterday by the Honorable Pravind Kumar Jugnauth, Prime Minister and Minister of Finance and Economic Development.

At 12%, the contribution of the financial services sector to the gross domestic product is significant for the country, and is one of the most important pillars for the Mauritian economy. At the same time, the landscape of the financial services sector is changing due to international reforms in the taxation, including from the OECD.

In order to enhance Mauritius as a jurisdiction of reputation and substance, key measures were announced in order to safeguard the reputation of Mauritius as an International Financial Centre and also to open the economy further for prospective investors.

Below are the key measures which have been announced in the Budget 2017-2018:

  • A blueprint will be devised by the Ministry of Financial Services, Good Governance and Institutional Reforms together with the Economic Development Board, the Bank of Mauritius, the Financial Service Commission and all key stakeholders in the financial services sector. The vision for the blueprint is for the sector to further adopt and meet international requirements on taxation over the next 10 years.
  • Global Business Companies holding a Category One license (“GBC1”) will move away from merely fulfilling one of the six licensing criteria regulated by the Financial Services Commission. Moving forward, such GBC1 companies must now look to satisfy at least two of the six licensing criteria.
  • The tax requirements for Global Business Companies will be reformed in order to align to international standards.
  • The legal obligations pertaining to Special Purpose Funds will be aligned with GBC1 companies.
  • The Stock Exchange of Mauritius, in collaboration with Euroclear, will have to transform the local bond market and set up an international capital market to attract African companies and governments.
  • In order to benefit from the Fintech revolution, the Economic Development Board will establish a Regional Fintech Association. The Financial Services Commission will develop the necessary legislation for Fintech.
  • Capital standards for banks will be increased from Rs 200 million to Rs 400 million. Banks will have 2 years to adjust, and the Banking Act 2004 will be amended accordingly.
  • In a bid to extend monitoring on money laundering in Mauritius, specific mention is made of the nexus between the drug trade and illegal gambling. Amendments to the Gambling Regulatory Authority Act are to be made, whereby cash betting transactions above Rs 2000 are to be banned, and licensees / operators earning more than 10 million are to be required to file suspicious transactions reports.

Hence, the measures announced purport to enhance the financial services landscape in Mauritius, by striving to build resilience against global uncertainties and represent a gateway to opportunities on an international level. Moreover, the measures pertaining to the Financial Services provide a road map towards greater stringency.  It is clear that the financial services sector lends itself towards a people strategy namely in employment creation and growth.