Mauritius Personal Income Tax

In general, individuals resident in Mauritius are tax­ed on their worldwide income. Income derived from outside Mauritius is taxed on a remittance basis. Non residents are taxed on Mauritian-source income only.

Individuals are considered resident if they meet any of the fol­lowing conditions:

  • They are present in Mauritius for at least 183 days during the tax year.
  • They are present in Mauritius for an aggregate period of 270 days or more during the current tax year and the two preceding tax years.
  • They are domiciled in Mauritius, unless their permanent place of abode is outside Mauritius.

The Finance (Miscellaneous Provisions) Act 2015 changed the end of the tax year from 31 December to 30 June; the six months ended 30 June 2015 was the transitional tax year.

Income subject to tax. The taxation of various types of income is described below.

Employment income. All income derived from employment is taxable, including salary, bonuses, commissions and fringe ben­efits. Housing, educational and other allowances are also taxable.

Any expenditure that is wholly, exclusively and necessarily incurred by an individual to perform the duties of an office or employment are deductible from gross emoluments. Passage ben­efits provided under an employment contract are not taxable to the extent that they do not exceed 6% of the basic salary of the individual. Exempt emoluments on termination payments received are restricted to an aggregate amount of MUR2 million (MUR1,500,000 before 1 July 2015) with respect to the following:

  • Severance allowances determined in accordance with the Employment Rights Act
  • Compensation negotiated under Section 42 of the Employment Rights Act, limited to 3 months for every period of 12 months of continuous remuneration
  • A lump-sum payment that results from the commutation of a pension or from a death gratuity or that represents consolidated compensation for death or injury, paid as a result of any Mauritian laws
  • Payments from superannuation funds or personal pension schemes approved by the Director-General of the Mauritius Revenue Authority
  • Lump-sum payments under the National Savings Fund Act
  • Retirement allowances

Self-employment and business income. Self-employed individu­als carrying on a trade, business or profession are subject to tax on their business profits. Expenses are deductible to the extent they are exclusively incurred to produce gross income.

All income derived from business is taxed with other income at the rates set forth in Rates.

Investment income. Interest income is taxable at a rate of 15%. Interest derived by nonresidents on deposits held with Mauritian banks is exempt from tax. Residents and nonresidents are exempt from tax on the following types of interest:

  • Interest on savings or fixed deposit accounts with Mauritian registered banks or nonbanking institutions authorized to accept deposits
  • Interest on government securities and Bank of Mauritius Bills
  • Interest on debentures quoted on the stock exchange

Dividends paid by resident companies are exempt from tax.

Directors’ fees. Directors’ fees paid to residents are taxed in the same manner as employment income, regardless of whether the services are rendered in or outside Mauritius. Excessive remu­neration is considered a distribution, which is fully taxable in the hands of the individual. Directors’ remuneration is taxed in the year the remuneration is charged in the company’s accounts.

Other income. Under the 2016-2017 budget, withholding tax at a rate of 10% will be imposed on payments made by individuals to nonresident entertainers and sportspersons and to management fees paid to individuals.

Exemptions. Under the Mauritius Diaspora Scheme contained in the Investment Promotion Act, Mauritian and foreign-source income of a member of the Mauritius Diaspora is exempt from tax for 10 income years beginning with the income year in which the individual returns to Mauritius.

Under the 2016-17 budget, emoluments of seafarers employed on vessels registered in Mauritius or on foreign vessels will be exempt from tax. The budget also provides a tax holiday of five years for asset and fund managers licensed by the Financial Services Commission and managing a minimum asset base of USD100 million and foreign ultra-high net worth individuals investing a minimum of USD25 million in Mauritius.

Capital gains. Capital gains are generally not taxable.

Deductions. Resident individuals can benefit from an Income Exemption Threshold (IET). The IET is deductible in determining chargeable income. The IET depends on the number of the indi­vidual’s dependents. The following table shows the IET for the income year ended 30 June 2016.

.                                    Number of                    Amount of IET

Category                   dependents                            MUR

A                                       0                                      285,000

B                                       1                                      395,000

C                                       2                                      455,000

D                                       3                                      495,000

Under the 2016-17 budget, the IET for each of the above catego­ries will be increased by MUR10,000, effective from the tax year ending 30 June 2017.

A retired individual who has reached age 60 before 1 July 2015 is eligible for an increased IET of MUR335,000 if he or she does not derive any taxable income from emoluments or business. The amount of MUR335,000 is further increased to MUR445,000 if the retired individual has one dependent. Under the 2016-17 budget, the IET will be increased by MUR10,000, effective from the tax year ending 30 June 2017.

An individual is entitled to deduct the actual premium paid in connection with a medical or health insurance policy for himself or his dependent in addition to the IET. The maximum deductible premium is MUR12,000 for the taxpayer. The amount of MUR12,000 is also the maximum deduction for the first depen­dent. The maximum deduction is MUR6,000 each for the second and third dependents. The relief is not allowed if either of the following circumstances exists:

  • The premium or contribution has been paid by the employer of the person.
  • The premium is paid under a combined medical and life assur­ance scheme.

If the dependent is a child pursuing a non-sponsored full-time undergraduate course at a recognized tertiary educational institu­tion, the individual is entitled, in addition to the IET, an exemp­tion of MUR135,000 for each child pursuing his or her under­graduate course in Mauritius at either an institution recognized by the Tertiary Education Commission or a recognized institution outside Mauritius. The additional exemption does not apply if any of the following circumstances exists:

  • Annual tuition fees, excluding administration and student union fees, are less than MUR44,500 for a child pursuing an under­graduate course in Mauritius. Under the 2016-2017 budget, the amount of MUR44,500 will be reduced to MUR34,800, effec­tive from the tax year ending 30 June 2017.
  • The total income (including Mauritian-source dividend income, exempt bank interest and interest on government securities and Bank of Mauritius Bills) of the individual or his or her spouse exceeds MUR2 million per year. Under the 2016-17 budget, the MUR2 million threshold will be increased to MUR4 million, effective from the tax year ending 30 June 2017.
  • The exemption was granted for the same child for more than six consecutive years.

If the total of the taxable and exempt income of an individual’s dependent exceeds the IET, the individual may not claim the IET. Any taxable income derived by the individual’s dependent must be added to the taxable income of the individual.

Interest relief is available with respect to housing loans that are contracted on or after 1 July 2006 and that are secured by a fixed charge on the immovable property of the taxpayer, effective from the tax year ended 31 December 2011. Under the 2016-17 bud­get, the date on which the loan is contracted is no longer relevant for the purposes of the relief. The interest relief is restricted to MUR120,000 per year. Like the IET, only resident individuals can claim the interest relief. Interest relief cannot be claimed in the following cases:

  • The taxpayer is the owner of a residential building at the time the loan is obtained.
  • The exempt interest and dividend income of the individual or his or her spouse, as the case may be, exceeds MUR2 million. Under the 2016-17 budget, the threshold of MUR2 million will be increased to MUR4 million, effective from the tax year end­ing 30 June 2017.
  • The taxpayer benefits from the new housing scheme, which is to be set up on or after 1 January 2011. At the time of writing, the housing scheme had not yet been set up.

An individual may benefit from a solar investment allowance based on the amount invested in a solar energy unit, including photovoltaic kits and batteries for the storage of electricity. For a couple, the allowance may be apportioned equally if neither spouse is a dependent spouse. Any unrelieved amount is carried forward to the next tax year.

Rates. An individual’s income tax liability is determined using a tax rate of 15%.

Relief for losses. Losses in any amount may be offset against any source of income, except employment income. Losses may be car­ried forward to the following five income years. Losses that arise as a result of annual allowances for capital expenditure incurred on or after 1 July 2006 can be carried forward indefinitely.

Estate and gift taxes

No estate tax is levied in Mauritius. Gift tax rates range from 12.5% to 45%.

Social security

Employees in Mauritius must contribute to the National Pension Fund, which provides for employees’ old-age retirement. Effective from 1 July 2016, the contribution rate for employees is 3% of gross salary, up to a maximum monthly contribution of MUR500. For employers, the rate is 6% of gross salary, up to a maximum monthly contribution of MUR1,000 per employee. The contribu­tion rate to the National Solidarity Fund is 2.5% for the employ­er, with a maximum of MUR417, and 1% for the employee, with a maximum of MUR167. The contribution rate for the National Solidarity Fund is applied to the basic salary of the employee. The employer must contribute to a levy computed at 1.5% of the total salary of the employee. Foreign nationals, other than those who work in export manufacturing enterprises, are within the scope of the social security obligations, regardless of their length of stay, effective from January 2014.

Tax filing and payment procedures

Employers must withhold taxes on employees’ emoluments. Individuals with self-employment or business income must make quarterly tax payments based on their income for the preceding quarter.

Every taxpayer must file a return by 30 September, stating the amount of all income received during the preceding year ending 30 June. Taxpayers must pay any tax due when they file the return. They may claim a refund on the annual return for any overpayment of tax. Regardless of their level of taxable income, the following individuals should submit an annual tax return:

  • An individual who derives emoluments that have been subject to tax under the Pay-As-You-Earn (PAYE) system
  • An individual who derives business income exceeding MUR2 million in an income year
  • An individual who derives a yearly net income of more than MUR285,000
  • An individual who derives Mauritian-source income that has been taxed at source
  • An individual who has acquired one or more immovable prop­erties and the aggregate price (including the cost of buildings or structures on the properties) exceeds MUR5 million
  • An individual who acquires a car for a price exceeding MUR2 million
  • An individual who acquires a car for which he or she pays reg­istration duty of MUR75,000 or more under the Registration Duty Act
  • An individual who acquires a pleasure craft (including the cost of its engine) for a price exceeding MUR1 million
  • An individual who has chargeable income
  • An individual who pays contributions under the National Pensions Act to the MRA

Married persons are taxed separately. Joint taxable income can be shared in any manner chosen by the couple.

The 2016-17 budget provides that the MRA will be allowed to request an individual with a yearly net income of more than MUR15 million or with an assets exceeding MUR50 million to submit a statement of assets and liabilities. A time limit of two years will also be introduced for the submission of amended tax returns.

Double tax relief and tax treaties

Mauritius has entered into double tax treaties with the following jurisdictions.

Australia*                         Kuwait                      Seychelles

Bangladesh                       Lesotho                     Singapore

Barbados                          Luxembourg             South Africa

Belgium                            Madagascar               Sri Lanka

Botswana                          Malaysia                   Swaziland

China                                Monaco                     Sweden

Congo (Republic of)          Mozambique             Thailand

Croatia                                Namibia                    Tunisia

Cyprus                               Nepal                        Uganda

Egypt                                  Oman                        United Arab

France                                Pakistan                    Emirates

Germany                            Qatar                         United Kingdom

Guernsey                            Rwanda                     Zambia

India                                   Senegal                     Zimbabwe

Italy

* With respect to personal income tax, the treaty concerns income from pensions, government service and students.

The agreements are based on the model treaties of the Organisation for Economic Co-operation and Development (OECD) and the United Nations (UN).

The treaties provide the following relief:

  • Dividends are taxed at a 0% to 15% rate.
  • Royalties are taxed at a 0% to 15% rate.
  • Income from shipping and air transport operations of enter­prises resident in a treaty country is not taxed in Mauritius.
  • Business profits of a nonresident are taxed only if the nonresi­dent operates through a permanent establishment or a fixed base in Mauritius.

Mauritius is negotiating double tax treaties with Algeria, Canada, the Czech Republic, Gibraltar, Greece, the Hong Kong Special Administrative Region (SAR), Iran, Lesotho (revised treaty), Malawi, Montenegro, Portugal, St. Kitts and Nevis, Saudi Arabia, Spain, Sudan, Tanzania, Vietnam and Yemen.

Residents receive a credit for foreign tax paid on foreign-source income. The foreign tax credit also takes into consideration under­lying taxes if the recipient owns, directly or indirectly, at least 5% of the shares of the company paying the dividends. The Mauritian tax law also provides for a tax-sparing credit.

Regardless of any tax treaty, royalties and interest paid by a com­pany that holds a Category 1 Global Business License (GBL1) to nonresidents are exempt from tax in Mauritius and are not subject to withholding tax in Mauritius if the payments are made out of the foreign-source income of the GBL1. This exemption does not apply to interest paid to nonresidents carrying on a business in Mauritius.

Mauritius and the United States have entered into an intergovern­mental agreement (IGA) for the implementation of the Foreign Account Tax Compliance Act. The IGA entered into force on 29 August 2014.

Temporary visas

The following categories of individuals do not need visas for business, tourism or transit purposes:

  • Holders of a laissez-passer issued by the United Nations, Common Market for Eastern and Southern Africa (COMESA), Southern African Development Community (SADC) or other internationally recognized organizations as may be prescribed by the Minister of Internal Affairs
  • Holders of passports issued by the INTERPOL who come to Mauritius on official missions
  • Holders of a laissez-passer issued by the African Reinsurance Corporation and the African Development Bank
  • Holders of passports issued by the governments of countries belonging to the European Union (EU)
  • Persons who intend to remain in Mauritius only during the stay of a vessel by which they arrive and depart
  • Holders of passports issued by the following jurisdictions:

Angola                      Ghana                            Reunion

Antigua and              Greece                            Romania

Barbuda                    Grenada                         Russian Federation

Argentina                  Hong Kong SAR           Rwanda

Australia                   Hungary                         St. Kitts and Nevis

Austria                      Iceland                           St. Lucia

Bahamas                   India                               St. Vincent and

Bahrain                     Ireland                            Grenadines

Barbados                  Israel                              Samoa

Belgium                    Italy                                San Marino

Belize                        Jamaica                          Saudi Arabia

Botswana                  Japan                              Seychelles

Brazil                        Kenya                             Sierra Leone

Brunei                       Kiribati                           Singapore

Darussalam               Korea (South)                Slovak Republic

Bulgaria                    Kuwait                           Slovenia

Burundi                    Latvia                             Solomon Islands

Canada                      Lesotho                          South Africa

Cape Verde               Liechtenstein                  Spain

Chad                         Lithuania                        Suriname

Chile                         Luxembourg                  Swaziland

China                        Macau SAR                   Sweden

Congo                       Malawi                           Switzerland

(Democratic           Malaysia                        Tanzania

Republic of)              Maldives                        Tonga

Congo                       Malta                              Trinidad

(Republic of)         Mexico                           and Tobago

Croatia                      Monaco                          Tunisia

Cyprus                      Mozambique                  Turkey

Czech Republic         Namibia                         Tuvalu

Denmark                   Nauru                             Uganda

Dominica                  Netherlands                    United Arab

Egypt                        New Zealand                  Emirates

Estonia                      Norway                          United Kingdom

Fiji                            Oman                             United States

Finland              Papua New Guinea.            Vanuatu

France                       Paraguay                        Vatican City

Gabon                       Poland                            Zambia

Gambia                     Portugal                         Zimbabwe

Germany                   Qatar

A foreign investor applying for permanent residence status (see Section H) may be issued a multiple-entry visa valid for up to one year pending the grant of the permanent resident status.

Work permits and self-employment

Work permits and residence permits are required for all foreign nationals who wish to work in Mauritius. The permits are valid for one year and are renewable. Work permits are usually granted to foreign nationals who possess professional and technical qualifications in fields for which locally qualified candidates are not available. Work permits may also be granted to foreign work­ers in industries for which labor is in short supply.

Application for work permits should be made in Mauritius by the employer and must indicate the exact title and duration of the position sought. The employer must submit the following docu­ments with the completed application form:

  • Job profile
  • Documentary evidence of academic and professional qualifica­tions and experience
  • Official copy of the applicant’s birth certificate or passport details
  • For skilled workers, a copy of the contract between the employer and the employee together with documentary evidence demon­strating that the employee will earn a minimum of MUR30,000 per month
  • A full medical report on the expatriate
  • A completed application form
  • Evidence that appropriate advertising has been made in two leading newspapers for the position

A processing fee of MUR500 must be paid on submission of each completed application form. Applications submitted with­out the fee are not considered.

In general, an applicant may not work while his or her work appli­cation and other papers are being processed, except if married to a Mauritian citizen. Application must be made at least three months before the projected date of employment.

If the foreign national wants to stay in Mauritius for more than five years, an application must be made for a residence permit, and a bank guarantee of MUR20,000 must be provided. The individual must also swear in an affidavit that he or she will not apply for Mauritian citizenship.

Changing employers usually is not permitted. If an employee changes employers, a new application for a work permit must be submitted by the new employer.

Application for renewal of a work permit should be made three months before expiration of the current work permit, and full jus­tification for the continued employment of the expatriate should be given. Even an individual who has worked legally in Mauritius for several years must renew his or her work permit every year.

Any non-citizen investor, self-employed person or employer of a professional may, through the Board of Investment, apply for an occupation permit so that such person or professional may engage in business or take up employment in Mauritius. To obtain the occupation permit from the Board of Investment, the following conditions must be satisfied:

  • An investor must have annual turnover exceeding MUR4 mil­lion, and the initial investment must be at least USD100,000 or its equivalent in freely convertible foreign currency.
  • A self-employed person must have annual income exceeding MUR600,000, with an initial investment of USD35,000.
  • A professional must have monthly salary exceeding MUR45,000. For a professional working in the Information and Communication Technology (ICT) sector, the minimum salary is MUR30,000 per month.

The following table provides the initial fees for an occupation permit.

Period of employment                                                   MUR

Less than 9 months                                                                10,000

Between 9 months and 2 years                                              15,000

Between 2 years and 3 years                                                  20,000

Residence permits

To obtain a residence permit, an applicant must be able to show sufficient economic means to live in Mauritius. Residence per­mits are issued for one-year periods and are renewable.

At the end of three years of a retired non-citizen’s residence permit, the person may be granted the status of permanent resident if he or she has transferred at least USD40,000 or its equivalent in con vertible foreign currency to Mauritius in each of the three years. The permanent residence permit is valid for a period of 10 years beginning with the expiration of the person’s resi­dence permit.

Family and personal considerations

Family members. The working spouse of a work permit holder must file an application independently of the expatriate to obtain a work permit.

Marital property regime. At the time of their civil marriage, cou­ples may elect between the community property regime and the separate property regime. They may change regimes during the marriage if they meet certain conditions.

Driver’s permits. Expatriates may drive legally in Mauritius with their home country driver’s licenses if they have the licenses validated by the traffic authorities. Mauritius does not have driver’s license reciprocity with any other country.

To obtain a driver’s license in Mauritius, a foreign national must take verbal and practical driving tests.