Last Friday came the long-awaited Budget Speech, one that many business owners were hoping would hint heavily towards a much needed economic boost. Today, we’re taking the notable measures announced and compiling them in an easy-to-read article for SMEs. Here’s the Budget Brief simplified 👇
Titled “Better Together,” the 2021-2022 budget comes as a follow-up to the previous one that sought to “preserve the stability of our economy”. This year the Budget focuses on three Rs: Recovery, Revival and Resilience. A core strategy with three pillars:
1️⃣ Boosting investment
2️⃣ Shaping a new economy
3️⃣ Restoring confidence
What’s in it for SMEs, MMEs & Entrepreneurs?
So what does that mean for businesses and what measures will impact the most on entrepreneurs and SMEs? In a dedicated section, the Minister acknowledged the important role SMEs play in employment and how much they’ve been affected by the pandemic. Therefore, the budget, he says, seeks to lift the confidence of entrepreneurs and continue to support SMEs.
• A Rs 100,000 interest-free loan from the DBM for cash flow issues
• A 0.5% COVID-19 Special Support Scheme loan of up to Rs 1 million
• Loan facilities of up to Rs 5 million to retailers (with a turnover of up to Rs 250 million) at a concessional rate of 3.5% p.a.
• Sustaining of wages by financing the monthly salary compensation of Rs 375 throughout the upcoming financial year
• A five-year extension of trade fee exemption up to Rs 5,000
• Amnesty granted on trade fees, penalties and interests that were due before January 2020
• The extension of the Tax Arrears Settlement Scheme for SMEs until December 2021
• The extension of the total maximum grant across all SME Mauritius schemes from Rs 150,000 to Rs 200,000
• A 110% deduction allowed on taxable income for direct expenses on the purchase of products manufactured locally by SMEs
• Up to 30% rebate on the annual rental of industrial space to manufacturing SMEs over the next 3 years
• The construction of an SME Industrial Park in Solferino, with 20% of free space allocated to startups for the first 3 years
• The creation of an online marketplace for startups
What else stands out for entrepreneurs and SMEs, we’ve made a list here 👇
• A Rs 5 billion Modernisation and Transformation Fund, which will be managed by a new Industrial Financial Institution (IFI)*
• The extension of the Credit Guarantee Scheme (CGS) for SMEs. This will cover 5% of the default amount on leases contracted from private leasing companies.
• The maximum investment through crowdlending platforms by the IFI will go up to Rs 1 million per project
• A 200% deduction from taxable income for the acquisition of specialised software and systems
*It is to be noted that the IFI will take over the activities of the ISP Ltd and SME Equity Fund.
Green Energy Industry
As part of his speech, the Minister iterated the importance of Green Energy for an economic boost and GDP growth for our country. In a series of measures with projects involving the CEB, the implementation of various renewable energy schemes by the latter will also concern businesses and SMEs.
Mauritius Is Opening
With over Rs 8.5 billion already allocated to employees of this sector through assistance schemes, the next step for the government is notably the opening of our borders. The latter will unfold as follows:
• As of 15 July, the country will be open to vaccinated tourists for “resort tourism,” with a mandatory 14-day hotel isolation period and a negative PCR test
• As of 1 October, the country will be open to vaccinated tourists with a negative PCR test and this without any restrictions
In addition to that, the government will be:
• Extending the Wage and Self-Employed Assistance Schemes to the tourism sector until September 2021
• Introduce a Tourism Business Continuity loan for SMEs via the DBM at a rate of 0.5% p.a.
So that’s it!
In concluding his speech, the Minister reiterated that the government will be extending exceptional assistance for tourism and SMEs. With uncertainty persevering, he also urged Self-Employed individuals to register themselves with the MRA to benefit from future government support.
Other key numbers:
• The budget deficit for the fiscal year 2020/2021 is expected to reach 5.6%
• Public sector debt will be 95% of GDP in June 2021 due to two consecutive GDP contractions
• For the fiscal year 2021/2022, a GDP growth of 9% is expected
• Total expenditure will represent 32.5% of GDP and total revenue 27.5% of GDP
• The Budget deficit will be contained at 5% of GDP
• The public sector debt to GDP ratio will be reduced by around 4 percentage points to 91%
Read everything here 👈