If we reflect on the evolution of the Mauritian employment tax landscape over the last couple of years, there are 2 things which stand out – First, increased compliance requirements for employers and second a significant change in the trend of employment costs. While the Government introduces measures to increase social welfare and to bridge the poverty gap, in doing so, more complexity is being created on the employment tax landscape.

With its ease of doing business and coupled with the fact that Mauritius offers attractive tax regimes, Mauritius has positioned itself as one of the leading International Financial Centres for investment across Africa. The changes on the international tax landscape, in particular adherence to economic substance rules, made investors reassess their Mauritian structures. Corporate structures with no employees might now be obliged to consider employing people in Mauritius in order to maintain their licences and be eligible for certain tax benefits.

From a domestic perspective, local companies have been struggling to maintain their businesses during the Covid-19 pandemic. Schemes were introduced to assist impacted business, including employment saving measures. However, on the other hand, social security contribution rates and the rate of solidarity levy peaked up, probably to fund those socail schemes.

In this article, we highlight the main changes on the employment tax landscape in Mauritius affecting both employers and employees.

A buoyant tax rate

The standard income tax rate in Mauritius is 15%.

Effective from 1 July 2018, a reduced tax rate of 10% was introduced for individuals having an annual net income not exceeding Rs 650,000. To alleviate the tax burden of low-income earners further, a 5% tax credit was thereafter introduced as from 1 July 2019 for those earning not more than Rs 50,000 a month and where the annual net income did not exceed Rs 700,000. These two fiscal changes were widely acclaimed by the majority of the people which fall within this bracket.

On the other hand, as from 1 July 2020, the rate of solidarity levy jumped from 5% to 25%. The solidarity levy is chargeable on tax resident individuals whose leviable income exceeds Rs 3 million in an income year. The legislative change also imposed the monthly withholding of solidarity levy on employers under the Pay As you Earn ("PAYE") system. Hence employers are required to withhold an additional 25% tax on employees earning a monthly emolument in excess of Rs 230,769, subject to a 10% cap. For PAYE purposes, the cap is calculated as 10% of total emoluments, whereas for individual income tax purposes, the cap is calculated as 10% of the sum of the net income1 and dividends from Mauritius.

This significant increase in solidarity levy impacted the high-income earners, many of whom are returning residents and foreigners working and living in Mauritius. Although the increase in solidarity levy will increase government revenue, it may encourage people to migrate out of Mauritius or make professionals think twice before returning or coming to work in Mauritius.

Government Wage Assistance Scheme ("GWAS")

The GWAS provided a substantial financial support to employers and employees during the strike of the Covid-19 pandemic in 2020 in Mauritius. Without the scheme, it is likely that we would have seen a significant increase in unemployment and many businesses would simply have closed down.

Employers who benefited from GWAS are however subject to a Covid-19 Levy equivalent to the lower of the amount received under GWAS or 15% of chargeable income for levy of the employing company, subject to conditions.

Hence, the GWAS is in substance money lent by the Government for the purpose of paying the salary of certain employees and which certain employers have to repay at a future date, subject to conditions.

Social security contributions in addition to payment of income tax

The Social Contribution (previously known as Contribution Sociale Genéralisée) replaced the National Pension Fund ("NPF") as from 1 September 2020.

Under the NPF, the contribution rates in relation to a private sector employee were 3% for employee contribution and 6% for employer contribution. The NPF was calculated on a capped maximum wage of Rs 19,900.

The Social Contribution was introduced to bring a balance between contributions made by low and high-income earners. Under the Social Contribution, lower contribution rates of 1.5% for employee and 3% for employer are applicable to private sector employees earning not more than Rs 50,000 monthly. Although the rate applicable for private sector employees earning more than Rs 50,000 monthly remained the same, that is, 3% for employee and 6% for employer, the Social Contribution is calculated on the monthly remuneration of the employee without any ceiling.

Contributions to the Portable Retirement Gratuity Fund ("PRGF")

The PRGF is a fund established under the Workers' Rights Act 2019 for the purpose of providing for the payment of a gratuity on the death or retirement of an employee.

Prior to the introduction of PRGF, an employer had the obligation to pay a gratuity on the retirement or death of an employee. However, the gratuity was payable only by the last employer and the gratuity was calculated only for the period during which the employee was employed with that last employer.

Under the PRGF, the employee's terms of service during his or her entire career is considered, irrespective of the number of employers served.

The PRGF is applicable to any worker or self-employed, excluding:

  • A worker drawing a monthly basic wage of more than Rs 200,000;
  • A migrant worker or a non-citizen;
  • A worker whose retirement benefits are payable under the Statutory Bodies Pension Fund Act or in accordance with a private pension scheme;
  • A job contractor; and
  • A public officer or a local government officer.

Contribution to the PRGF is a cost solely borne by the employer and is at the rate of 4.5%. The PRGF is not a tax.

For more information on PRGF, read our newsletter on this Link.

On an ending note

The legislative changes brought over the last few years definitely have had good intents. However, from the employer's perspective, the employment tax landscape is becoming more and more complex and costly. Coupled with the adverse financial impact of the Covid-19 pandemic on enterprises, employers need to find the right balance between making efficient use of their talent pool to generate optimal revenue and managing employment costs.


1. "Net income" means the aggregate amount remaining after deducting from the gross income all allowable deductions. The net income should exclude lump sum payable by way of commutation of pension or by way of death gratuity or as consolidated compensation for death or injury.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.