The Mauritius Revenue Authority (MRA) has issued a
Circular to Employers (6 October 2025) outlining important payroll tax changes effective from late 2025. Below is a summary of the key updates and what they mean for employers and employees followed by an analysis of the legal basis for the new Fair Share Contribution withholding.
Revised Company Car Benefit Valuation (Effective 1 Oct 2025)
What’s changed? The taxable benefit value for company cars provided to employees has been amended as of 1 October 2025. The valuation now depends on both the car’s cost and its engine capacity (or type, in the case of electric cars). The new monthly taxable benefits are as follows:
Cars costing ≤ Rs 3 million:
– Up to 1,600 cc: Rs 12,000 per month
– 1,601 to 2,000 cc: Rs 13,500 per month
– Above 2,000 cc: Rs 15,000 per month
– Electric car (any cost ≤ Rs 3m): Rs 13,500 per month
Cars costing > Rs 3 million:
– Rs 3M up to Rs 5M: Rs 25,000 per month
– Rs 5M up to Rs 8M: Rs 35,000 per month
– Over Rs 8M: Rs 50,000 per month
Introduction of the Fair Share Contribution (FSC) via PAYE
What is FSC? The Fair Share Contribution (FSC) is a new tax measure introduced by the Finance Act 2025, requiring high-income earners to contribute an additional 15% tax on part on leviable income above Rs 12,000,000 per income year (2025/26–2027/28).
PAYE withholding: Notably, the MRA circular instructs that the FSC should be collected through the PAYE system, meaning employers must withhold it from salaries of high earners, similar to income tax.
Duration: The FSC applies to income earned from 1 July 2025 and is a temporary measure for income years 2025/26, 2026/27, and 2027/28.
Grey area regarding the FSC:
- The Finance Act 2025 introduced FSC for individuals (ss. 16B–16C) and amended s.93(1) (PAYE).
- However, s.93(1) refers to FSC “under section 16E”, a section that does not exist. Meanwhile, s.16C(2) says FSC is payable on filing the individual’s return.
- Until now, the law prevailed, pending any official communication or publication from the MRA – meaning the FSC is payable on assessment and not via payroll.
- The MRA Circular is an official guidance document, but not legislation and cannot amend the law on its own.
- Implementing FSC withholding via payroll aligns with the MRA’s stated position and day-to-day administration, which is generally prudent for compliance and helps avoid large year-end liabilities for affected employees.
- Monthly collection smooths cash flow for high earners and keeps employers aligned with the authority’s expectations.
- The Circular provides a monthly cumulative FSC threshold table and instructs employers to apply PAYE at 15% on the portion of cumulative chargeable income above the threshold.
- Given Mauritius courts’ strict approach to taxing statutes, we are considering flexibility while recommending collection via PAYE; further communication will follow on this functionality.