Mauritius | Update - Finance Act 2025 Payroll Changes Effective 1 July 2025

Mauritius | Update - Finance Act 2025 Payroll Changes Effective 1 July 2025

The Finance Act 2025 (Act No. 18 of 2025) has been published in Government Gazette No. 66 on 9 August 2025.
This Act introduces several amendments to the Income Tax Act, with certain provisions impacting payroll from 1 July 2025.

Two important points to note before we look at the changes:
  1. Fair Share Contribution (FSC): The legislation contains inconsistencies regarding how this is to be collected, and we are awaiting formal guidance from the Mauritius Revenue Authority (MRA) and in-country advisors.
  2. Company car benefit values: These will only change once the amended Income Tax Regulations are gazetted. Until then, the existing taxable values remain in force.
Key payroll-related changes from 1 July 2025
Revision to the 'exempt person' definition (section 2(a))
  1. The monthly threshold for employees to qualify as an “exempt person” has increased from MUR 30,000 to MUR 38,462.
  2. Directors remain excluded from this category.
Introduction of the Fair Share Contribution (FSC)- individuals
Amended Section 16B and new Section 16C (Sub-Part AB)
Who it applies to:
  1. Individuals whose FSC income threshold exceeds MUR 12 million in an income year.
FSC income threshold includes:
  1. Net income of the individual.
  2. Dividends from resident companies or registered co-operative societies.
  3. The individual’s share of dividends from a resident société or succession, treated as if fully distributed.
Excludes:
  1. Dividends/distributions from global business entities.
  2. Certain qualifying lump sums, such as:
    1. Commutation of pension,
    2. Death gratuity,
    3. Compensation for death or injury,
    4. Payments made under statute, from a superannuation fund, or from a DG-approved personal pension scheme.
Rate and base:
  1. 15% on the amount of leviable income exceeding MUR 12 million.
  2. Leviable income is based on chargeable income plus included dividends, excluding the items listed above.
Effective period:
  1. Applies to income years starting 1 July 2025, 1 July 2026, and 1 July 2027.
Important - FSC collection method uncertainty
  1. Section 16C(2) states that FSC “shall be paid at the time the individual submits his return of income under section 112,” which means payment on assessment when filing the annual return.
  2. However, amendments to section 93 (PAYE) say employers should withhold FSC “under section 16E”, but section 16E does not exist. The FSC for individuals is legislated under sections 16B and 16C.
  3. This drafting inconsistency means that, as the law currently stands, there is no enforceable PAYE withholding requirement for FSC.
  4. We are awaiting clarity from the MRA and/or a corrective legislative amendment to confirm the intended collection mechanism. We will communicate an update as soon as guidance is available.
Dependent child with a disability (section 27(6B)
  1. Section 27(6B) has been expanded to allow taxpayers to claim benefits derived by a bedridden next of kin or a child under the National Pensions Act or the Social Contribution and Social Benefits Act 2021.
Removal of certain deductions and reliefs
The following have been repealed:
  1. Section 27D: Deduction for household employees.
  2. Section 27K: Relief for adoption of animals.
  3. Section 28: Angel investor allowance.
Revised Individual Income Tax Rates (First Schedule, Part I)

 
Company car benefit - awaiting Regulation amendments
Please note: these will only take effect once the Income Tax Regulations are amended and officially published
Monthly Taxable Value of Car Benefit Revised
For cars costing up to MUR 3 million:


For cars costing more than MUR 3 million:


Next steps
  1. Payroll will be updated for the exempt person threshold and the new tax rates.
  2. FSC withholding will not be implemented through PAYE until the collection method is clarified.
  3. Car benefit values will remain unchanged until the amended Regulations are officially published.

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