“Do we want to be the most regulated or the most respected jurisdiction?”

Mauritius Finance

While Budget 2026/2027 introduces several measures aimed at strengthening Mauritius’ financial services industry and restoring fiscal discipline, industry leaders believe the country’s long-term competitiveness will ultimately depend on how effectively those reforms are implemented. Speaking during Mauritius Finance’s annual Budget Breakfast held at the Hennessy Park Hotel on 23 June, panellists welcomed a number of initiatives announced by the government, but also cautioned against rising compliance costs, excessive regulation and policy measures that could gradually erode Mauritius’ attractiveness as an international financial centre.

The financial services industry has broadly welcomed the direction taken by Budget 2026/2027, but leading practitioners have cautioned that the success of the reforms will depend less on the measures themselves than on the government’s ability to implement them effectively.

That message emerged repeatedly during Mauritius Finance’s annual Budget Breakfast, where economists, tax specialists, bankers and fiduciary professionals examined the budget’s implications for one of the country’s largest export sectors. 

“Rather than increasing personal income tax, corporate tax or VAT, government has broadened and intensified the tax base.”

The panel, moderated by Faraz Rojid, CEO of Mauritius Finance, featured Anthony Leung Shing, Country Senior Partner and Tax Partner at PwC Mauritius; Assad Abdullatiff, Managing Director of Axis Fiduciary Ltd; Fazeel Soyfoo, Partner at Andersen Mauritius; and Daniel Essoo, CEO of the Mauritius Bankers Association. Together, they provided an in-depth assessment of the budget’s fiscal, regulatory and business implications, while also identifying several opportunities and challenges that will shape the industry’s future.

A resilient economy, but an ambitious fiscal path

Opening the discussion, Anthony Leung Shing argued that the Mauritian economy had demonstrated resilience despite a difficult international environment characterised by geopolitical uncertainty and slower-than-expected growth.

He noted that although economic growth remained positive, the country experienced a significant revenue shortfall during the last financial year. Lower economic activity resulted in weaker tax collection, while anticipated revenues linked to the Chagos settlement had yet to materialise.

Government nevertheless succeeded in containing expenditure through tighter spending controls and lower-than-expected capital expenditure, allowing the budget deficit to remain below earlier projections despite adverse conditions.

Inflation and unemployment had also remained broadly under control despite global headwinds.

 

“The biggest hidden cost can be uncertainty.”

 

Looking ahead, however, he described the government’s fiscal objectives for 2026/2027 as ambitious. The planned reduction in the budget deficit will require stronger economic growth, higher tax receipts and continued expenditure discipline. Success will depend not only on traditional sectors maintaining their momentum but also on emerging activities, including artificial intelligence and the digital economy, creating new sources of growth.

Above all, Anthony Leung Shing stressed that implementation would be decisive. “The biggest challenge is not about all the strategic objectives and policies,” he said. “It is really going to be about execution.”

For Mauritius, he argued, improving business facilitation, reducing administrative bottlenecks and accelerating investment approvals will be just as important as introducing new policy initiatives.

Fiscal arithmetic points to difficult choices

The discussion then turned to the sustainability of public finances. According to Anthony Leung Shing, the government is effectively relying on stronger revenue growth than expenditure growth to restore fiscal balance over the coming years.

A substantial proportion of additional revenue is expected to come from improved tax collection and stronger economic activity, while the anticipated receipt of Chagos-related revenues would further support public finances.

On the expenditure side, however, debt servicing continues to represent one of the government’s largest financial commitments. Anthony Leung Shing pointed out that interest payments now absorb a growing share of public revenue, illustrating the importance of restoring fiscal sustainability over the medium term.

He also addressed the politically sensitive issue of pension reform. While acknowledging the controversy surrounding the measures, he argued that their financial impact would only become fully visible several years from now and would reduce, rather than eliminate, the long-term pressure exerted by pension expenditure on public finances.

For him, fiscal consolidation remains dependent upon sustained economic growth rather than expenditure reductions alone.

Removing unnecessary administrative barriers 

Throughout the opening exchanges, panellists repeatedly returned to one theme: Mauritius’ future competitiveness will depend on creating an environment where businesses can invest quickly and confidently.

Faraz Rojid recalled how earlier business facilitation reforms had significantly improved Mauritius’ international standing and suggested that a similar focus on implementation should accompany the latest budget measures. The private sector, he argued, remains ready to invest provided the country continues removing unnecessary administrative barriers. 

“We must make sure that the assessment does not become an obsession that drives us to regulate beyond what is necessary.”

“We need to create that ecosystem,” he said, emphasising that improved execution could become one of Mauritius’ strongest competitive advantages.

Indeed, rather than debating individual tax measures in isolation, participants consistently examined whether Budget 2026/2027 strengthens Mauritius’ broader investment proposition and whether the reforms announced can be translated into tangible improvements for businesses operating within the jurisdiction.

Government broadens the tax base while avoiding headline tax increases

Taxation quickly emerged as one of the most closely scrutinised aspects of Budget 2026/2027. While the government has avoided increasing the country’s principal tax rates, panellists argued that the cumulative effect of several targeted fiscal measures points towards a significant increase in tax revenues. It also represents a significant broadening of the tax base that businesses cannot afford to ignore.

“The story is quite consistent,” explained Fazeel Soyfoo. “Rather than increasing personal income tax, corporate tax or VAT, government has broadened and intensified the tax base.”

Among the measures highlighted were changes affecting insurance premium taxation, digital services, restrictions surrounding the Corporate Climate Responsibility Levy (CCRL), and amendments to the Fair Share Contribution.

Taken individually, many of these changes may appear modest. Collectively, however, panellists argued that they will materially increase the tax burden borne by businesses operating in Mauritius.

The 35 per cent income tax debate continues

One of the most debated measures remains the permanent introduction of the 35 per cent income tax rate for higher earners. Although several panellists expressed reservations regarding its permanence, Fazeel Soyfoo pointed out that the mechanics of the new regime differ from the previous Fair Share Contribution.

Unlike the earlier measure, which applied to chargeable income together with local dividends, the permanent tax rate applies to chargeable income only.

As a result, local dividends are no longer subject to the same level of additional taxation, meaning that, mathematically, some taxpayers may ultimately pay less than under the previous Fair Share Contribution despite the continuation of the 35 per cent rate.

Nevertheless, he questioned whether introducing the permanent rate before undertaking the comprehensive review of Mauritius’ tax system sends the right signal internationally.

Certainty becomes as important as taxation itself

One announcement that received broad support from the panel was the proposed introduction of compliance agreements between taxpayers and the Mauritius Revenue Authority (MRA). Anthony Leung Shing described the measure as potentially transformative.

Historically, tax administration has often been characterised by investigations, assessments and disputes after transactions have already taken place. Compliance agreements, by contrast, could fundamentally alter the relationship between taxpayers and the MRA by encouraging greater transparency and earlier engagement.

Drawing on similar models already used across several OECD jurisdictions, Anthony Leung Shing explained that taxpayers would voluntarily disclose information to the tax authority in exchange for greater certainty regarding the tax treatment of complex transactions. According to him, predictable tax treatment influences investment decisions, corporate structuring and capital allocation just as much as the applicable tax rate itself.

In an increasingly sophisticated international tax environment, certainty itself has therefore become a competitive advantage, and, as he observed, “the biggest hidden cost can be uncertainty.”

The panel nevertheless acknowledged that appropriate safeguards will be essential to protect taxpayers should legislation or factual circumstances subsequently change.

Competitiveness extends far beyond taxation

Throughout the discussion, panellists repeatedly emphasised that taxation represents only one element of a jurisdiction’s competitiveness. The proposed Golden Visa provided one illustration. Anthony Leung Shing welcomed the government’s efforts to attract international investors but questioned whether Mauritius’ programme currently offers sufficient advantages when benchmarked against jurisdictions such as Dubai or Singapore.

Whereas competing financial centres offer longer residency periods and broader incentives, Mauritius’ proposal remains comparatively limited despite requiring significant investment.

More importantly, international investors evaluate an entire ecosystem rather than isolated incentives. Healthcare, education, digital infrastructure, air connectivity, regulatory efficiency, political stability and quality of life all contribute to investment decisions.

For Anthony Leung Shing, more than a Golden Visa, we therefore “need a golden ecosystem.”

Modernising banking regulation

Attention then shifted towards reforms affecting the banking industry. Daniel Essoo welcomed the government’s decision to undertake a comprehensive review of the Banking Act, observing that the existing legislation no longer fully reflects the realities of modern banking.

Digital financial services, technological innovation and increasingly sophisticated cross-border banking activities require a legislative framework capable of supporting contemporary business models.

Among the measures receiving particular support were proposals introducing open banking, stronger cybersecurity cooperation and legislative amendments clarifying information-sharing powers between banks and the Financial Crimes Commission (FCC).

The Chief Executive explained that recent legislative changes had unintentionally created uncertainty regarding the sharing of banking information with investigators. The Finance Bill is expected to remove these ambiguities while preserving banks’ legal obligations regarding customer confidentiality.

Daniel Essoo also welcomed the introduction of structured cybersecurity information-sharing mechanisms, arguing that coordinated responses to cyber threats have become essential as financial institutions become increasingly digital. 

Banking competitiveness remains under pressure

Despite supporting these reforms, Daneil Essoo warned that Mauritius’ banking sector continues to face growing competitive pressures. Banks operating from Mauritius now bear a significantly heavier tax burden than competitors in several international financial centres.

As banking groups evaluate where to book international transactions, an increasing number of operations are being conducted elsewhere. Reducing operational costs, simplifying regulation and improving efficiency will all be necessary if Mauritius wishes to maintain its attractiveness as a regional banking hub.

For the Chief Executive, maintaining competitiveness requires constant adaptation rather than incremental change alone.

Maintaining credibility without sacrificing competitiveness

As the discussion turned to Mauritius’ preparations for the 2027 Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) mutual evaluation, panellists agreed that preserving the jurisdiction’s international reputation remains essential. However, they also cautioned against allowing compliance to become an end in itself.

Assad Abdullatiff, Managing Director of Axis Fiduciary Ltd, stressed that Mauritius has every interest in maintaining the integrity and credibility of its financial centre. Having experienced the consequences of grey-listing, he acknowledged the importance of continually strengthening the country’s anti-money laundering and counter-terrorism financing framework.

Yet, he argued that the regulatory response must remain proportionate. “We must make sure that the assessment does not become an obsession that drives us to regulate beyond what is necessary,” he explained.

According to the director, the principal deficiencies that previously resulted in Mauritius being grey-listed were not rooted in weaknesses within the global business sector itself, but rather in effectiveness and implementation. Consequently, future reforms should continue to be risk-based, proportionate and supported by extensive consultation with industry participants.

He also urged policymakers to benchmark every major regulatory reform against competing international financial centres before introducing additional obligations.

“Do we want to be the most regulated jurisdiction,” he asked, “or do we want to be the most respected jurisdiction?”

Business facilitation remains a competitive necessity

Throughout the discussion, several speakers argued that regulatory efficiency has become just as important as taxation when international investors evaluate financial centres.

Assad Abdullatiff noted that many clients increasingly cite lengthy approval processes, licensing delays and administrative bottlenecks as among the principal challenges of doing business in Mauritius. He suggested that the government revisit certain aspects of the Global Business licensing regime, particularly for non-financial services entities.

Under the current framework, management companies already perform extensive customer due diligence and compliance work before submitting applications to the Financial Services Commission (FSC). Greater reliance on those regulated intermediaries, he argued, could significantly reduce duplication while allowing the regulator to focus its resources on higher-risk financial services activities.

Such reforms, he suggested, would improve both efficiency and competitiveness without weakening regulatory oversight.

Clarifying directors’ liability welcomed by industry

Among the measures receiving the strongest endorsement from panellists was the government’s proposal to clarify directors’ liability for unpaid income tax. Fazeel Soyfoo described the announcement as one of the most significant developments for the financial services industry.

For several years, uncertainty surrounding the interpretation of the Income Tax Act – particularly following recent court decisions – had created considerable concern among independent directors serving on Global Business Companies.

Government now proposes restricting personal liability to officers occupying executive management positions rather than applying it broadly to all directors. “The principle is welcome,” said Fazeel Soyfoo. “Liability should follow control, not title.”

He nevertheless urged legislators to ensure that the final wording of the Finance Bill leaves no ambiguity regarding the distinction between executive management and independent non-executive directors.

Assad Abdullatiff echoed those concerns, observing that although the proposed amendments represent a major improvement, careful drafting remains essential to avoid conflicting interpretations in the future.

Both panellists regarded the measure as an example of constructive dialogue between the government and industry. Repeated engagement through Mauritius Finance and other professional bodies, they argued, had ultimately produced a legislative response that balances accountability with legal certainty.

Trust register proposals raise practical concerns

The proposed trust register generated one of the panel’s most detailed debates. While supporting greater transparency and international cooperation, panellists questioned whether certain disclosure requirements extend beyond international standards established by the Financial Action Task Force (FATF).

Assad Abdullatiff argued that the objective of FATF Recommendation 25 is to ensure transparency regarding ownership and control, which does not necessarily require the extensive disclosure of every operational detail relating to a trust.

Among the concerns raised were proposals requiring disclosure of trust assets, detailed information regarding beneficiaries, professional advisers and the filing of trust deeds themselves. According to him, several of these requirements appear to exceed what competing jurisdictions currently require.

He also questioned the practicality of certain implementation deadlines and warned that excessive reporting obligations could encourage the migration of trust structures to alternative jurisdictions.

Panellists additionally highlighted cybersecurity concerns. Concentrating highly sensitive information concerning trust assets and beneficiaries within a single register inevitably creates new risks that must be carefully managed.

Several participants therefore urged the government to simplify the proposed framework and rely more extensively on subsidiary regulations rather than embedding highly prescriptive requirements directly within primary legislation.

Digital transformation welcomed, but opportunities remain

Daniel Essoo argued that digitalisation represents another area where Mauritius can strengthen its international competitiveness. Although the government’s proposals relating to open banking and cybersecurity were welcomed, he expressed disappointment that Budget 2026/2027 did not go further in encouraging electronic payments and reducing reliance on cash.

Lower cash transaction limits, wider acceptance of digital payments across public services and the gradual withdrawal of paper cheques would, in his view, improve operational efficiency while strengthening the country’s AML/CFT framework.

Such measures, he suggested, would align Mauritius more closely with international best practice while reducing opportunities for illicit financial activity.

Missed opportunities and emerging concerns

As the discussion entered its final phase, panellists reflected on several opportunities they believe remain unaddressed. 

Anthony Leung Shing questioned the timing of implementing the Qualified Domestic Minimum Top-up Tax (QDMTT), observing that Mauritius appears to be moving faster than several larger jurisdictions despite the absence of mandatory international implementation deadlines. He suggested that early implementation risks imposing additional compliance costs without necessarily generating a competitive advantage.

Attention also turned to the Corporate Climate Responsibility Levy (CCRL). Fazeel Soyfoo argued that recent amendments limiting the utilisation of tax credits effectively increase the minimum tax burden borne by Global Business Companies.

When viewed alongside other fiscal measures introduced, he warned that the cumulative cost of doing business in Mauritius has risen considerably. Within only a few years, effective taxation, employment costs and regulatory obligations have all increased, making it increasingly difficult for Mauritius to compete with rival international financial centres.

Industry calls for continued dialogue

The audience discussion reinforced many of the issues raised by the panellists. Participants expressed concern regarding the taxation of software subscriptions purchased from overseas providers, the practical implications of new withholding tax rules, insurance premium taxation, rising compliance costs and the increasing complexity of conducting international business from Mauritius.

Others questioned whether the growing accumulation of taxes, levies and reporting requirements risks undermining the country’s long-standing reputation as an efficient jurisdiction for international investment.

Responding to these concerns, panellists acknowledged that while many of the individual measures may appear modest, their combined effect on operating costs should not be underestimated.

Several speakers emphasised that maintaining regular dialogue between the government, regulators and industry will therefore remain essential as the Finance Bill is finalised and implementation begins.

A common objective, but a delicate balance

Despite differing views on individual measures, the discussion concluded on a largely constructive note.

There was broad agreement that the government has correctly identified many of the strategic priorities facing Mauritius’ financial services industry, from digital transformation and fiscal consolidation to regulatory modernisation and international credibility.

The challenge now lies in ensuring that implementation is proportionate and practical, and that Mauritius remains internationally competitive.

For the panellists, Mauritius’ future as an international financial centre will ultimately depend on its ability to preserve a delicate balance: strengthening regulation without creating unnecessary administrative burdens; restoring fiscal sustainability without eroding competitiveness; and meeting evolving international standards while continuing to attract global investors.

As several speakers observed throughout the morning, Budget 2026/2027 represents an important step. Whether it becomes a turning point for Mauritius’ financial services sector will depend not on the announcements themselves, but on how effectively they are translated into action.