Mauritius Budget 2025

On 5 June 2025, the new Government of Mauritius presented its first national budget since taking office, under the theme: “From Abyss to Prosperity: Rebuilding the Bridge to the Future”, announced by Dr the Hon Navinchandra Ramgoolam.

The new Government has outlined a three-year policy plan aimed at resetting economic renewal, a new social order and fiscal consideration for the country that is currently facing a public debt of 90% GDP while ensuring compliance with international tax standards, particularly the OECD’s BEPS 2.0 framework.

One of the key measures is the introduction of a minimum tax for large multinational groups operating in or through Mauritius, reinforcing the country’s commitment to global tax transparency and fairness.

While there is no change to the Value Added Tax (“VAT”) rate, the threshold for compulsory VAT registration has been lowered from Rs 6 million to Rs 3 million in annual turnover. This measure will take effect from 6 June 2025 and is expected to bring more small and medium enterprises into the VAT net.

There has also been an increase in excise duties, affecting a range of products including alcoholic beverages, tobacco, and sugary drinks (based on sugar content). Notably, excise duties will also be reintroduced on hybrid and electric vehicles, reversing a previous incentive for cleaner transport options.

In addition, the Government announced the abolition of certain fiscal incentives under the Smart City Scheme while maintaining the Revenue Minimum Garantie of MUR 20 000.

We set out below some of the key takeaways from the 2025/26 Budget speech. 

Personal Tax

• As from 01 July 2025, the personal income tax will be simplified. The number of tax brackets is going down from 11 to just 3 as follows:

• A monthly downward allowance based on income received will be introduced as part of the contribution sociale generalisee (“CSG”) which will be applied over 2 fiscal years until it phases out as follows:

• If you earn more than Rs 12 million per annum (including dividends), you will need to pay a new “Fair Share” tax of 15% on your chargeable income (including dividends) which will be collected under Pay As You Earn (“PAYE”) system.

Exemptions and allowances

• certain allowances such as the CSG Income Allowance; CSG Child Allowance; CSG School Allowance; Pregnancy Care Allowance; Maternity Allowance; Housing Loan Relief Scheme which has been set to end on 30th June 2025 will be renewed and phased out over two years. While other allowances such as the Home Loan Payment Scheme which is set to end on 30th June 2025 will not be renewed.
• Deductions like payments to domestic workers and charity donations will no longer be allowed in personal tax return
• An employee or a self-employed individual aged between 18 and 28 years and earning up to Rs 1 million annually will be exempted from income tax on his or her emoluments or business income.

Corporate Tax

• Companies can now spend up to 50% of their Corporate Social Responsibility (“CSR”) Fund instead of a maximum of 25% currently.
• Small businesses with an annual turnover of up to MUR 10 million will benefit from a 5% annual investment tax credit, spread over 3 years, for the purchase of new equipment (up to MUR 500 000 per year).
• A Virtual Asset Service Provider licensed by the FSC engaged in the exchange, transfer, safekeeping, and administration of virtual assets will be allowed to claim the 80% partial exemption regime (“PER”) on income derived from such activities, provided the substance requirements are met.
• A minimum tax of 15% will be applicable for foreign subsidiaries of Multinational Enterprises based in Mauritius whose annual consolidated revenue of Euro 750 million or more is being taxed at an effective rate of less than 15% in a jurisdiction.
• For certain companies, operating in the following sectors: hotels, insurance companies, financial intermediation, real estate-related activities and telecommunications, if their tax payable is less than 10% of their book profits, they will be required to pay a minimum tax of 10% on book profits, ensuring a baseline contribution regardless of tax deductions or incentives.
• Companies with annual chargeable income over Rs 24 million will need to pay a “Fair Share Contribution” as follows:

1. 5% if taxed at the standard corporate rate of 15%
2. 2% if taxed at the preferential 3% rate

• Exclusions apply to:

• Global Business Licence (GBL) holders
• Companies with tax holidays or exemptions
• Income that is itself tax-exempt

However, this contribution cannot be offset using unused tax credits (e.g. foreign tax credits) and will require quarterly payments similarly to the Advance Payment System (“APS”).

Value Added Tax

• From 1 October 2025, the VAT registration threshold will be lowered from MUR 6 million to MUR 3 million in annual taxable turnover, making more small businesses liable to register.
• More everyday items are zero-rated which include fruits and vegetable purées for infants, canned vegetables, frozen packed vegetables and hairdressing services.
• Effective as from 01 Jan 2026, VAT on digital or electric services by foreign suppliers will be implemented.
• Services provided to a foreigner who is physically outside Mauritius at the time of supply will still be subject to 15% VAT if the service is used or consumed in Mauritius.

Tax Administration

• Certain Scheme will be in operation up to 31st March 2026 such as the Tax Dispute Settlement Scheme (“TDSS”) which will be a one off where a taxpayer who withdraws his case at the Assessment Review Committee, the Supreme Court or Privy Council and has a tax claim will benefit from a full (100%) waiver of penalties and interests but can only benefit from the scheme if tax due is paid by 31st March 2026. 
• The Voluntary Disclosure Settlement Scheme (“VDSS”) where a taxpayer will benefit from a full (100%) waiver of penalties and interests for voluntary disclosure if they have not declared or have under-declared income or taxable supplies in the past if they now want to  regularise their tax affairs.
• Tax Arrears Settlement Scheme (“TASS”) will be renewed where a tax payer having a tax debt, as at 30th June 2025, will benefit from a full (100%) waiver of penalties and interests.
• Moreover, the Mauritius Revenue Authority (“MRA”) will only be able to raise an assessments in respect to only two past years, except in exceptional circumstances. 
• There will be no penalty applicable where a person fails to submit a Statement of Income under the Current Payment System on the due date. 
• The fee for obtaining a tax ruling has increased to MUR 3 000 for individuals (up from MUR 2 000) and MUR 50 000 for companies (previously MUR 10 000).
• During the 2025/26 financial year, businesses with an annual turnover exceeding Rs 80 million will be required to adopt the e-invoicing system.
• Imports of capital goods valued at MUR 500,000 or less (previously MUR 1 million) will now not be subject to VAT, provided they are declared as non-VAT payments in the VAT return.
• In addition to the above, the scope and methodology used to apply the arm’s length principle will be revisited to enhance clarity and ensure more consistent interpretation.

Mauritius Permits

• The validity period for Retired Non-Citizen Residence Permits and Occupation Permits for investors and self-employed individuals will be reduced from 10 years to 5 years, with the option for renewal subject to compliance checks.
• A maximum age limit of 24 years will now apply to dependent children across all permit categories.
• Retired non-citizens holding residence permits must now reside in Mauritius for at least 180 days per year to retain their permit.
• Individuals holding a Retired Non-Citizen Residence Permit will be prohibited from taking up employment or conducting any business activity in Mauritius.
• The Young Professional Occupation Permit will be shortened from three years to two years. Afterward, eligible individuals may apply for a standard Occupation Permit in the Professional category, provided they meet the criteria.
• Non-citizens purchasing residential property under the EDB-approved schemes will now pay a 10% registration duty (previously 5%) on the property’s value at the time of registration.

If you have any questions or require any clarifications, please feel free to contact us.