As an expat living in Mauritius, understanding the local tax system is essential for a smooth transition to island life. Mauritius is known for its attractive tax regime, which is one of the reasons it has become a popular destination for expats.
However, navigating the tax landscape can still be a bit daunting, especially if you’re unfamiliar with the local rules and regulations. In this blog post, I will walk you through the basics of the Mauritian tax system, provide some specific examples, and offer tips on how to manage your taxes as an expat.
Understanding the Mauritian Tax System
Mauritius operates a residence-based tax system, meaning that if you are a resident, you are taxed on your worldwide income. If you are not a resident, you are only taxed on income derived from Mauritius. Learn how to get a Mauritian Resdency Permit here.
You are considered a tax resident if you spend more than 183 days in Mauritius during a tax year (July 1st to June 30th) or if you have a permanent place of abode in Mauritius and are present in the country for a minimum of 270 days in aggregate over three consecutive years.
Key Features of the Mauritian Tax System
- Progressive Income Tax Rates:
- As of July 1, 2023, Mauritius implemented a progressive income tax system, replacing the previous flat rate. Under this system, the tax rates vary from 0% to 20%, depending on your income. This shift has introduced a more equitable structure where higher incomes are taxed at higher rates.
- Solidarity Levy:
- In addition to the income tax, a solidarity levy is imposed on individuals with annual income exceeding MUR 3 million. This levy is calculated at 25% on the excess income over MUR 3 million or on the sum of chargeable income and dividends, whichever is higher, subject to certain conditions.
- Tax-Free Allowances:
- Mauritius offers tax-free allowances that reduce your taxable income. These allowances vary depending on your personal circumstances, such as whether you have dependents or a spouse. For example, if you are married with two children, your annual tax-free allowance is higher compared to a single person with no dependents.
- No Capital Gains Tax:
- Mauritius does not impose capital gains tax. This means that if you sell a property or shares for a profit, you won’t be taxed on the gain, which is a significant advantage for investors.
- No Inheritance Tax:
- Another benefit of the Mauritian tax system is the absence of inheritance tax, which can be a significant consideration for long-term financial planning.
- Double Taxation Agreements (DTAs):
- Mauritius has an extensive network of DTAs with various countries, including South Africa, the UK, and France. These agreements help prevent you from being taxed twice on the same income in both Mauritius and your home country.
Mauritius Personal Income Tax Rates (Effective July 1, 2023)
To give you a clear picture of how the new progressive tax system works, here is a breakdown of the personal income tax rates based on chargeable income:
| Chargeable Income (MUR) | Basis of Computation (MUR) | Tax Rate (%) |
|---|---|---|
| 0 – 390,000 | First 390,000 | 0 |
| 390,001 – 430,000 | Next 40,000 | 2 |
| 430,001 – 470,000 | Next 40,000 | 4 |
| 470,001 – 530,000 | Next 60,000 | 6 |
| 530,001 – 590,000 | Next 60,000 | 8 |
| 590,001 – 890,000 | Next 300,000 | 10 |
| 890,001 – 1,190,000 | Next 300,000 | 12 |
| 1,190,001 – 1,490,000 | Next 300,000 | 14 |
| 1,490,001 – 1,890,000 | Next 400,000 | 16 |
| 1,890,001 – 2,390,000 | Next 500,000 | 18 |
| 2,390,001 and above | Remainder | 20 |
This progressive tax structure ensures that individuals with higher incomes contribute a proportionately larger share of their income in taxes, while those with lower incomes benefit from lower tax rates or even tax exemptions.
Specific Examples of Taxation in Mauritius
Example 1: Income Tax for a Working Expat
Suppose you are an expat working in Mauritius, earning an annual salary of MUR 2,000,000. Based on the progressive tax rates, your tax liability would be calculated as follows:
- 0% on the first MUR 390,000 = MUR 0
- 2% on the next MUR 40,000 = MUR 800
- 4% on the next MUR 40,000 = MUR 1,600
- 6% on the next MUR 60,000 = MUR 3,600
- 8% on the next MUR 60,000 = MUR 4,800
- 10% on the next MUR 300,000 = MUR 30,000
- 12% on the next MUR 300,000 = MUR 36,000
- 14% on the next MUR 300,000 = MUR 42,000
- 16% on the next MUR 400,000 = MUR 64,000
- 18% on the next MUR 500,000 = MUR 90,000
- 20% on the remaining MUR 20,000 = MUR 4,000
Total tax payable: MUR 276,800.
Learn about how to open a bank account for your Mauritian salary here.
Example 2: Tax on Rental Income
If you own property in Mauritius and earn rental income, this income is also subject to the progressive tax rates. For instance, if you earn MUR 600,000 in rental income annually, after deducting allowable expenses, you would apply the same progressive rates to calculate the tax owed.
You can read about the best places to own a property in Mauritius here.
Example 3: Business Income Tax
If you operate a business in Mauritius, the corporate tax rate remains at 15%. However, there are certain tax incentives available for companies engaged in specific sectors, such as global business or technology services, which may reduce the effective tax rate.
Navigating Tax Filing in Mauritius
Tax returns in Mauritius are filed annually, with the deadline usually set for the end of September for the tax year ending on June 30th. The Mauritius Revenue Authority (MRA) provides an online portal for filing returns, making the process straightforward.
If you’re unfamiliar with the system, it might be wise to consult with a local tax advisor who can guide you through the filing process and ensure you’re taking advantage of any applicable deductions and credits.
Important Tips for Expats
- Keep Records: Maintain detailed records of your income, expenses, and any tax payments. This will make the filing process easier and help you in case of any queries from the tax authorities.
- Consult a Tax Professional: The Mauritian tax system is straightforward, but if you have complex financial situations, such as income from multiple countries, consulting a tax professional can save you time and ensure compliance.
- Understand Your DTA: If you’re from a country that has a DTA with Mauritius, familiarize yourself with its provisions. This can help you avoid double taxation and optimize your tax liabilities.
- Stay Updated: Tax laws can change, so it’s essential to stay informed about any updates that might affect your tax obligations.
Final Thoughts
Navigating the Mauritian tax system as an expat doesn’t have to be overwhelming. With its progressive tax rates, generous allowances, and absence of capital gains and inheritance taxes, Mauritius offers a tax-friendly environment.
By understanding the basics, keeping good records, and seeking professional advice when needed, you can manage your taxes efficiently and focus on enjoying your life in this island paradise.
