In Mauritius, employers face several tax obligations, including withholding and remitting employee income tax, contributing to social security schemes, and paying a training levy.
Income Tax (PAYE)
Employers must withhold income tax from employee salaries under the Pay As You Earn (PAYE) system. The tax rates for the income year 2024-2025 are progressive, starting at 0% for the first Rs 390,000 and reaching 20% for income exceeding Rs 2,050,000. The due date for remitting withheld taxes is by the end of the month following the deduction.
Social Security Contributions
Employers contribute 6% of employee remuneration towards the National Pension Fund (NPF) and the National Savings Fund (NSF). Employees earning up to MUR 50,000 monthly contribute 3% of their basic salary, while those earning above this threshold contribute 6%. The combined contribution (employer and employee) is 9%. An additional 2.5% of remuneration is contributed by the employer for the Contribution Sociale Généralisée (CSG).
HRDC Training Levy
Employers are required to pay a 1.5% levy on the total basic salary of their employees (excluding household workers) to the Human Resource Development Council (HRDC). This levy funds training and development programs.
Special Allowance
For the 2024-2025 period, employers are required to pay a special allowance to eligible employees in two equal installments, due by the last working day of December 2024 and January 2025, respectively. Alternative payment arrangements in four installments are possible with mutual agreement, provided the first installment is paid by the end of December 2024.
Other Obligations
- Registration: Employers must register with the Mauritius Revenue Authority (MRA) within 14 days of becoming an employer.
- Returns: Annual returns of employee emoluments and tax deductions are due by August 15th each year.
- Compliance: Employers must adhere to all tax deadlines and reporting requirements, including providing employees with statements of earnings and tax deductions.
- Penalties: Late tax payments incur penalties of 5% of the unpaid tax plus 1% interest per month or part thereof.
It's important to note that this information is current as of February 5, 2025, and might be subject to change. Consulting with a tax professional or referring to the official MRA website for the most up-to-date details is recommended.
Employee tax deductions in Mauritius for 2025 are determined by the Income Tax Act and are subject to change based on the annual budget.
Key Tax Aspects for Employees in Mauritius
- Tax Rates and Thresholds: Mauritius employs a progressive tax system with varying rates and thresholds. It's important to refer to the latest official Mauritius Revenue Authority (MRA) resources for the most up-to-date figures.
- PAYE (Pay As You Earn): Employers in Mauritius are responsible for deducting income tax from employee salaries monthly through the PAYE system. The deducted amount is directly remitted to the MRA.
- Tax Deductions: Employees can claim various deductions, lowering their taxable income. These include deductions for dependents (spouse, children, and bedridden next of kin), contributions to approved pension schemes and retirement funds, and specific investments like rainwater harvesting systems.
- Employee Declaration Form (EDF): Employees use this form to declare their dependents and eligible deductions to their employer. The employer then uses the EDF information to correctly calculate PAYE deductions.
- Statement of Emoluments and Tax Deductions: Employers are legally obligated to provide employees with an annual statement by August 15th detailing earnings and tax deducted during the previous income year.
Specific Deductions and Reliefs
- Dependents: Specific deduction amounts are defined for each dependent. Certain limitations apply based on the dependent's income.
- Additional Deduction for Children in Private Schools: MUR 60,000 per child is deductible for expenses related to children attending fee-paying private schools.
- Additional Deduction for Higher Education: A substantial deduction of MUR 500,000 (up to four dependents) is available for children pursuing undergraduate or postgraduate courses.
- Household Employee Wages: Deductions for wages paid to household employees are capped at MUR 30,000. For married couples, the combined deduction cannot exceed this amount.
- Rainwater Harvesting Systems: The cost of investing in a rainwater harvesting system during the income year can be fully deducted.
Employer Responsibilities & Deadlines
- Employer Registration: All employers must register with the MRA within 14 days of hiring their first employee.
- PAYE Remittance: Employers are responsible for timely remittance of deducted PAYE amounts to the MRA.
- Special Allowance 2024: This specific allowance, designed for lower-income employees, has its own set of regulations, deadlines, and reporting requirements. Refer to official government resources for the most current details.
Important Considerations
- Residency: Tax residency status impacts eligibility for certain deductions and reliefs.
- Annual Budget Changes: Tax laws and regulations can be revised annually during the budget presentation. Staying updated with the latest from the MRA is essential.
- Professional Advice: Consulting a tax professional is highly recommended for personalized guidance and ensuring compliance.
Please note that this information is current as of February 5, 2025, and may be subject to change.
In Mauritius, the Value Added Tax (VAT) is a consumption tax levied on most goods and services.
VAT Rates and Thresholds
- Standard Rate: 15% applies to most goods and services.
- Zero Rate: 0% applies to specific goods and services like basic food items (sugar, rice, bread), exported goods and services, and certain utilities (electricity, water).
- Exempt Supplies: These are entirely exempt from VAT, including certain financial and insurance services, educational services, and healthcare.
- Registration Threshold: Businesses with an annual turnover exceeding MUR 6 million (approximately USD 131,000 as of today's date) must register for VAT. Certain professions (accountants, lawyers, consultants) must register regardless of turnover.
Filing and Payment
- Taxable Period: Businesses with annual turnover over MUR 10 million must file monthly. Others can opt for quarterly filing.
- Deadlines: Monthly filers must submit by the end of the following month. Quarterly filers have 20 days from the quarter end (March 31, June 30, September 30, December 31). Electronic filing is mandatory.
- Returns: VAT returns require reporting output tax, input tax, total taxable supplies, imported goods value, and any solidarity levy. Monthly filers must also submit a detailed annex listing taxable supplies.
- Reverse Charge: B2B transactions for digital services are zero-rated, with the resident business reporting via the reverse charge mechanism. However, providers of these services must still register for VAT, even if they only supply to businesses.
- Penalties: Penalties apply for late or incorrect filings.
- Voluntary Registration: Businesses below the threshold can register voluntarily.
- Deregistration: Businesses may deregister if their turnover falls below MUR 6 million or upon cessation of business.
- Tax Arrears Settlement Scheme (TASS): The TASS provides a full waiver of penalties and interest on outstanding tax arrears for income tax, VAT, and gambling tax, if taxpayers register by December 31, 2024 and pay in full by March 31, 2025.
As of February 5, 2025, the MUR to USD conversion rate may fluctuate.
Mauritius offers a range of tax incentives for businesses and individuals as of February 5, 2025. Please be aware that tax regulations can change, and this information is current as of today's date. Consulting a tax professional for personalized advice is always recommended.
Corporate Tax Incentives
- Partial Exemption Regime (PER): Companies engaged in specific sectors can benefit from an 80% exemption on certain income streams. Qualifying sectors include robotic and AI-enabled advisory services, closed-end funds selling money market or debt instruments, and payment intermediary services. Substance requirements must be met to qualify.
- Investment Tax Credit (ITC): A 15% tax credit over three years is available for companies investing in artificial intelligence and patents. This incentive aims to promote innovation and technological advancement within the Mauritian economy.
- Tax Exemption for Virtual Assets: Gains derived from the sale of virtual assets and tokens are fully exempt from income tax. This encourages investment and development within the burgeoning digital asset sector.
- Corporate Climate Responsibility (CCR) Levy Reduction: While the CCR levy is set at 2% of chargeable income for companies with turnover exceeding MUR 50 million, companies under the PER can claim an 80% reduction on this levy if they meet substance requirements.
- Captive Insurance Tax Holiday: Captive insurers are eligible for a 10-year income tax holiday from the start of their operations.
- SME Development Scheme: Small and medium enterprises (SMEs) can benefit from an eight-year income tax holiday, along with other tax concessions, upon obtaining an SME Development Certificate.
Individual Tax Incentives
- Increased Tax Exemption Thresholds: The exemption threshold for lump-sum pension, retirement, or severance payments has been increased to MUR 3 million.
- Tax Deduction for Education Expenses: Parents with children in fee-paying private schools can claim a tax deduction of MUR 60,000 per child annually.
- Progressive Income Tax Rates: Individuals benefit from a progressive income tax system, with rates ranging from 10% to 25%, depending on income level.
- Corporate Tax Rate: The standard corporate tax rate in Mauritius is 15%.
- Value Added Tax (VAT): The standard VAT rate is 15%, with reduced rates or exemptions applicable to certain sectors.
- No Capital Gains Tax, Inheritance Tax, or Withholding Tax on Dividends: These exemptions contribute to Mauritius's attractive tax environment for investors.
- Double Taxation Agreements: Mauritius has an extensive network of double taxation agreements (DTAs) with over 40 countries. These agreements prevent double taxation on income earned in Mauritius and the treaty partner country.
Application Procedures
Specific application procedures vary depending on the incentive. Information can be obtained from the Mauritius Revenue Authority (MRA) or relevant government agencies responsible for administering specific programs. Professional guidance is advisable for navigating the application process and ensuring compliance.