The 2026/2027 National Budget arrives at a defining moment for Mauritius. The global economy remains fractured by geopolitical tensions, shifting trade dynamics and the accelerating pace of technological change – a challenging backdrop for any small, open economy. Yet, as Prime Minister Dr. Navinchandra Ramgoolam observed, it is time to “start where you are and change the ending.”
This budget has sought to achieve a delicate balancing act: navigating the imperative of fiscal consolidation while seeking to avoid austerity measures that would stifle growth or harm the most vulnerable. The deficit is projected to narrow to 3.7% of GDP, down from 9.3% in the previous year, while public sector debt is expected to decline to 85.5% of GDP. This fiscal discipline is the cornerstone of the budget, a clear acknowledgment that the near-90% debt-to-GDP ratio is the single greatest constraint on the nation’s development.
But this is not merely a budget of repair. Framed around the principles of responsibility, solidarity, economic efficiency, and social justice, it outlines a “Future Ready” economic strategy built on seven pillars – from leveraging Artificial Intelligence and unleashing a start-up revolution to re-engineering traditional sectors and unlocking the potential of the blue economy. The challenge, as the Prime Minister put it, is to ensure that this revolution is one Mauritius prepares for, participates in, and benefits from.
The success of this budget will be judged not just on its ability to balance the books, but on its capacity to lay the groundwork for a more resilient, diversified, and prosperous Mauritius. It is a journey from reform to results, where the path is charted but the destination depends on execution.
Tax Changes 2026/2027: A Shift in Fiscal Architecture
Personal taxation
The New Personal Income Tax Bands: A Permanent Shift for High Earners
The most significant and discussed change on the personal taxation front is the introduction of a new, permanent top income tax band of 35% on chargeable income exceeding MUR 12 million. This replaces the temporary “Fair Share Contribution” that was introduced in the previous budget, effectively making a crisis measure a structural feature of the tax system.
The revised rate structure is as follows:
- 0% on the first MUR 500,000 of chargeable income.
- 10% on the next MUR 500,000 (from MUR 500,001 to MUR 1,000,000).
- 20% on income from MUR 1,000,001 up to MUR 12,000,000.
- 35% on any chargeable income above MUR 12,000,000.
While the Prime Minister framed this as a move towards fairness, it signals a clear policy shift. The 35% rate is a significant tax increase for the nation’s top earners, including entrepreneurs, senior executives, and highly skilled professionals. This is a cohort that is highly mobile and globally sought after, and this measure could potentially undermine efforts to attract and retain the very talent the “Future Ready” economy depends on.
Income Tax Exemptions
- The exemption threshold on lump sum received as pension, retiring allowance, or severance allowance will be raised from MUR 3 million to MUR 3.5 million.
- An income tax exemption of four years will be granted to a qualifying expatriate employee of a company engaged in the manufacturing of solar photovoltaic systems.
- It will be clarified that the disturbance allowance payable to public officers serving in Rodrigues or the Outer Islands will be exempted from tax.
Corporate Taxation
Corporate Climate Responsibility (“CCR”) Levy
The CCR Levy, a 2% charge on profitable companies, has been made significantly more onerous, as unused tax credits, including foreign tax credits, can no longer be used to offset the CCR Levy. Furthermore, the levy will be paid quarterly under the Advance Payment System (“APS”) in a phased manner:
- 25% in FY 2026/27;
- 50% in FY 2027/28;
- 75% in FY 2028/29; and
- Full APS in FY 2029/30
This measure impacts a wide range of companies, particularly those with international operations that have historically been able to offset their tax liability. For internationally focused businesses, the levy now becomes an additional and often irrecoverable cost, potentially making Mauritius a more expensive jurisdiction in which to operate.
Fair Share Contribution on Corporates
The Fair Share Contribution will now be payable by all companies having a chargeable income exceeding MUR 24 million, without the additional criteria of having VATable supplies above MUR 24 million or being liable for VAT registration. This simplification removes a layer of complexity but also broadens the scope of companies that may be captured by the provision.
Taxation of ICT Service Providers
A new measure brings non-resident companies that provide software, software licenses, and software maintenance services into the Mauritian income tax net. This is complemented by a new Tax Deduction at Source (“TDS”) of 1% on payments exceeding MUR 300,000 to such suppliers. This is a clear attempt to level the playing field for local providers and capture revenue from the growing digital economy. However, it also raises questions about double taxation and the potential burden on the local businesses that rely on these foreign services.
Tax Deducted at Source (“TDS”) on Digital Services
TDS will also be extended to payments made to persons providing advertising, promotional, endorsement, digital content, or marketing services through social media platforms or other similar electronic means, at a rate of 5%. This measure captures the growing digital advertising economy and seeks to tax income from services provided through these platforms.
Investment Incentives
The Government has extended the Investment Tax Credit of 15% per year over three years (45% in total) for manufacturing companies investing in new plant and machinery, AI solutions, and patents. This incentive is now applicable until 30 June 2029, signaling a long-term commitment to encouraging productivity-enhancing investment. Any unrelieved investment tax credit may be carried forward over 10 years.
Start-Ups
A major initiative to foster innovation is the introduction of a 10-year income tax holiday for new start-ups, applicable from the day of operations. This could be powerful in attracting entrepreneurs aiming to create a new generation of high-growth companies, although the definition of a “start-up” company remains to be clarified.
Reduced Corporate Tax Rate on Exports
The reduced corporate tax rate of 3% applicable on profits derived from exports of goods will not apply where such profits are derived from exports of live animals. This targeted exclusion suggests a policy shift away from encouraging live animal exports.
Global Business Sector
The definition of a “Global Business Entity” has been amended to exclude trusts and foundations with resident settlors, founders, or beneficiaries. This is a significant policy shift. In 2017, Mauritius made commitments to the OECD and EU to eliminate “ring-fencing” and ensure its tax regime did not discriminate between domestic and international activities so this measure may be scrutinised.
Partial Exemption Regime
The definition of core income generating activities for Investment Advisers and Asset Managers to benefit from the 80% partial exemption regime will be broadened to include the management of non-securities instruments such as loan receivables, mortgage-backed exposures, and invoice financing portfolios. This is a welcome expansion that recognises the evolving nature of the asset management industry.
Variable Capital Companies
The Variable Capital Companies Act will be amended to permit the conversion of a Protected Cell Company into a Variable Capital Company, ensuring legal continuity and providing greater flexibility for investment structures.
Income Tax Holiday for Captive Insurance
The 10-year tax holiday granted to captive insurance companies will be extended for another period of five years for captives issued with a licence prior to 19 June 2026. This provides additional certainty and incentive for this specialised sector.
Insurance Premium Tax
A new 5% Insurance Premium Tax will be introduced on short-term general insurance policies from 1 January 2027, applying to both new and renewed policies.
Corporate Social Responsibility (“CSR”)
A corporate will only be permitted to spend up to 25% of its Corporate Social Responsibility Fund and remit at least 75% of the Fund to the National Social Inclusion Foundation (NSIF) through the MRA. This reverses the more flexible framework introduced last year and restores the previous requirement to remit the majority of CSR funds to the government.
Removal of Deductions
The following deductions will be removed as from 1 July 2026: the 150% deduction of expenditure incurred by hotels on cleaning, renovation, and embellishment works; and the double deduction of expenditure on Joint Tertiary Education contracts with African Universities. These measures are part of the government’s broader effort to broaden the tax base.
Reduction of Annual Allowance for Hotels
The rate of annual allowance applicable to capital expenditure incurred on hotels will be reduced from 30% to 15%. This will slow the rate at which hotel investments can be depreciated for tax purposes, increasing the tax liability of hotel operators.
Investment Certificate
The commencement date of the tax exemption of eight years granted under the Investment Certificate issued by the Economic Development Board will, henceforth, be the date of start of operations of the company instead of the date of its incorporation. This is a practical change that aligns the tax benefit with when the business actually begins to operate.
Qualified Domestic Minimum Top-Up Tax (“QDMTT”)
Investment funds and real estate investment vehicles designated as the ultimate parent entity of a Multinational Enterprise will be exempted from QDMTT, effective from 1 July 2025. Intra-group consolidation adjustments will be allowed in the GloBE income calculations. The time period for amending a QDMTT return has been extended from two to three years, and the penalty for non-payment of QDMTT has been reduced from 5% to 2.5%. These changes reflect a more nuanced approach to implementing the OECD’s Pillar Two framework.
Value Added Tax (“VAT”)
A welcome decision was the announcement that the standard VAT rate would remain unchanged at 15%. However, this good news may be outweighed by several significant structural changes to the VAT system, discussed below.
Loss of VAT Neutrality:
Perhaps the most consequential change for the financial services sector is the decision to make management services supplied to Global Business Companies and to trusts and foundations with resident settlors or beneficiaries VAT-exempt instead of zero-rated. While zero-rating allows a business to reclaim the VAT it pays on its inputs (input tax), an exempt supply does not. This means management companies will no longer be able to recover the VAT they incur on their own costs (e.g., rent, utilities, professional fees). This additional cost will likely be passed on to clients, making the entire value chain within the Global Business sector more expensive and less competitive, and this measure arguably also chips away at the fundamental principle of VAT neutrality, where the tax is intended to be borne by the final consumer, not by businesses in the production chain.
Payment Services Zero-Rated:
Conversely, payment services provided to Global Business Licence companies by a holder of a payment service provider licence issued by the Bank of Mauritius will be made zero-rated for VAT purposes. This provides a level playing field and ensures that such services remain competitively priced.
Digital and Cross-Border Services:
The VAT rules for foreign suppliers of digital and electronic services have been simplified. A foreign supplier will not be required to register for VAT if its annual turnover of taxable supplies is less than MUR 3 million. It will also not be required to register if it makes taxable supplies exclusively to a VAT-registered person, as the reverse charge mechanism will apply. Additionally, the requirement to appoint a tax representative for the submission of VAT returns has been removed. Online marketplaces and digital platforms are now explicitly included in the definition of digital and electronic services.
Selected Items and Exemptions:
Several specific goods and services have had their VAT treatment changed. Photovoltaic systems and components will not be subject to VAT, signaling a strong incentive to adopt renewable energy. Electronic books are now VAT-exempt, and postal services are now zero-rated. Common salt, whether locally produced or imported, is now zero-rated.
A VAT-registered person providing accommodation services in a hotel or tourist residence will be required to remit 50% of VAT liability in foreign currency, in on ongoing effort to encourage foreign currency inflows.
Non-Governmental or Non-Profit Organisations receiving funding from the National Social Inclusion Foundation will be exempted from VAT on goods received as donations from abroad and which are related to their normal activities.
VAT exemption on accommodation has been extended to include international sports events (excluding championships or leagues organised by regional or international sports federations) and international television and cinema awards events. Entrance fees to a sport event of any discipline under the responsibility of a National Sports Federation will be VAT-exempt, and goods related to sports activities received as donation from abroad by a National Sports Federation will also be exempt.
Conversely, the fees payable for a VAT ruling have increased significantly: from MUR 3,000 to MUR 5,000 for an individual, and from MUR 15,000 to MUR 75,000 for companies, sociétés, and trusts.
VAT Return and Compliance:
The time limit to claim unclaimed input VAT credits has been reduced from 36 months to 24 months from the date it should have originally been claimed. The time of supply rules have been clarified: where neither an invoice nor VAT invoice has been issued nor payment received, the time of supply will be deemed to occur three months after the goods are delivered or the services performed.
Tax Administration and Enforcement
Compliance Agreements
A new framework will allow the MRA and taxpayers to enter into a binding Compliance Agreement to resolve tax issues before a formal assessment is issued. In exchange for a taxpayer’s full cooperation and waiving their right to object or appeal, the Director-General may reduce or waive penalties. This is a pragmatic tool for dispute resolution, but it also gives the MRA significant leverage and may raise concerns about procedural fairness.
Power to Raise Assessments
The MRA will be empowered to raise an assessment beyond the statutory time limit in cases of fraud or wilful neglect, further increasing the potential for tax audits and retrospective liabilities.
Director’s Liability
The definition of a “principal officer” for director liability is now aligned with the VAT Act, meaning liability for unpaid taxes will be restricted to executive directors who exercise management functions. This is a welcome reform for non-executive directors who have previously been exposed to personal liability for tax debts.
Penalties
The budget introduces a suite of steeper fines and penalties for non-compliance with VAT, including increased fines for failing to produce records (from MUR 200,000 to MUR 500,000), new penalties for failing to issue a fiscal invoice (MUR 5,000 per day, capped at MUR 1 million), and new penalties for failing to use the mandatory e-invoicing system (a fine of up to MUR 500,000 and potential imprisonment up to two years). Failure to provide information requested by the MRA is now an offence punishable by a fine not exceeding MUR 100,000 and imprisonment for up to two years.
Crypto-Asset Reporting
The MRA will implement the OECD Crypto-Asset Reporting Framework, enabling the collection of information from crypto-asset service providers for automatic exchange with foreign tax authorities.
Tax Residence Certificate Fees
Fees for the issuance of Tax Residence Certificates will also significantly increase: for collective investment schemes from USD 1,000 to USD 2,000; for individuals from MUR 1,000 to MUR 2,000; and for other applicants from USD 200 to USD 500.
Revenue Tribunal
The amount payable on appeal before the Revenue Tribunal against a determination of the Registrar-General or a claim under the Customs Act, Customs Tariff Act, and Excise Act will be at 5% of the amount claimed or MUR 5 million, whichever is lower.
Indirect and Other Taxes
Excise Duties
Excise duties on tobacco and alcohol products have been increased by 10%, with the exception of beer, wine, and liqueur. Excise duty on the sugar content of sugar-sweetened products has been increased from 12 to 15 cents per gramme of sugar, with the levy extended to other sugary products such as sweets, fruit jellies, jams, crystallised fruits, biscuits, waffles, wafers, and chewing gums from 1 October 2026. Sugar-sweetened products imported in small quantities for personal use will be exempted.
Customs Duty
The customs duty of 15% applicable on quartz slabs used as countertop will be abolished. The exemption granted to importers or manufacturers on goods imported in semi-knocked down condition for further processing resulting in at least 20% value addition will be abolished. Manufacturers of alcoholic products will be exempt from customs duty on imported wine used as input in the production of excisable goods. A processing fee of MUR 150 will be charged for each Simplified Customs Assessment Form for clearing of parcels imported through the post or courier services from 1 September 2026.
Real Estate and Property Taxation
G+2 Scheme Restrictions
The government will no longer grant leases for the sale of apartments on State Lands and Pas Géométriques under the G+2 scheme to foreigners. A 10% special levy will be imposed on the sale of such apartments by the vendor. This levy will not apply to notarial reservation contracts that have already been signed.
Economic Development Board (“EDB”) Property Schemes Review
The duties and taxes applicable to the transfer of residential properties under EDB property schemes (PDS, IRS, RES, Smart City) will be reviewed.
First-Time Buyer Exemptions
The exemption threshold for first-time buyers has been increased: from MUR 2.5 million to MUR 3 million for bare land, and from MUR 5 million to MUR 6 million for an apartment or house. The exemption now extends to individuals who own agricultural land, correcting the previous position.
Transfer of Property by NHDC and NSLD
A deed of transfer witnessing the transfer of immovable property by the National Housing Development Company Ltd or the New Social Living Development Ltd to a ‘syndicats de copropriétaires’ will be exempted from Registration Duty, Land Transfer Tax, and Tax on Transfer of Leasehold Rights in State land.
Registration of Report of Land Surveyor
The fixed duty applied on registration of land surveyor reports will henceforth be charged on each lot specified in the reports.
Golden Visa Scheme and Immigration
Golden Visa Scheme
The previously-announced Golden Visa is granted to an applicant who undertakes to invest a minimum of USD 1 million within 12 months in high-value sectors such as FinTech, global treasury, artificial intelligence, biotechnology, and renewable energy. The Golden Visa applies for a period of up to two years, with the possibility of renewal.
After making the minimum investment, the Golden Visa holder will be eligible to apply for a Permanent Residence Permit in Mauritius. Work permits for domestic workers accompanying the Golden Visa holder will be processed within five working days.
The tax benefits for Golden Visa holders mirror those of Premium Visa holders: taxation on foreign employment income only where such income is remitted to Mauritius; no deemed remittance where expenditure is incurred locally through the use of a foreign credit or debit card; and no tax on funds deposited into a bank account where a declaration is provided that taxes have already been paid abroad.
Occupation Permits
The Economic Development Board Act will be amended to review and streamline the criteria for the issuance of Occupation Permits:
- Investor Category: The applicable minimum initial investment threshold will henceforth be USD 100,000. The minimum annual turnover will be revised at MUR 5 million as from year three of registration, and MUR 8 million as from year five of registration. For Innovative Start-ups, performance indicators will be introduced.
- Professional Category: The two sub-categories, ProPass and Expert Pass, will be merged into one category given that the benefits are the same. The minimum monthly basic salary will be set at MUR 50,000 across all sectors.
- Self-Employed Category: The applicable minimum business income will be reviewed at MUR 2 million as from year three of registration, and MUR 3 million as from year five.
- New Technical Category: A new Technical Category will be introduced under a Government-to-Government framework, where an Occupation Permit will be granted for an initial period of three years, renewable thereafter.
- Family Occupation Permit Category: The Family Occupation Permit category will be abolished.
Immigration Measures
A non-citizen who has married a Mauritian citizen outside Mauritius may submit an official document attesting that on the date of marriage, they were not married to any other person. The application fee of USD 50 for residence permits has been extended to spouses of Mauritian citizens and their dependents. A digital system will allow all non-citizens to apply for Electronic Travel Authorisation prior to travelling to Mauritius. Residence permits may be issued in digital, card, or paper-based format. The absolute discretion of the Minister to deprive a non-citizen of resident status or cancel a visa in public interest will be removed.
Employment and Labour Measures
Pension Reforms: Balancing Fairness and Sustainability
Perhaps the most consequential structural reform in this budget is the overhaul of the pension system. The Basic Retirement Pension (BRP) will be replaced by the State Age Pension from 1 January 2027.
Key Features of the State Age Pension (SAP):
- Flexible Eligibility: Individuals can opt to draw their pension between the ages of 60 and 70, with actuarial adjustments. Drawing early results in a reduction (0.5% per month), while deferring payment increases the pension (0.75% per month after 65). The standard pension at 65 is set at MUR 16,555.
- Means Testing: The SAP is now subject to a means test. The full pension is payable to individuals with a monthly income below MUR 14,000. The pension is gradually tapered for incomes above this threshold, with a de minimis payment of MUR 1,000 available up to an income ceiling of MUR 50,000. For a couple where both spouses are eligible for and draw the SAP, a reduction of up to 25% of their combined SAP will apply, subject to a combined means test.
- Residency Criteria: In order to benefit from the SAP, a person must have resided in Mauritius for at least 15 years in aggregate since attaining the age of 40, with three of those 15 years being immediately before the claim being made.
New National Pension Fund Contributions:
The introduction of the NPPF represents a significant increase in employer contributions. For employees earning up to MUR 50,000 per month, the employer will contribute 7.5%, and the employee 1.5%. For those earning above MUR 50,000 up to MUR 225,000, the employer contributes 10.5% and the employee 3.0%. This replaces the CSG and PRGF contributions.
Introduction of a Retirement Savings Bond offering returns of up to 6% per annum to encourage retirement savings
Public Officials’ Pensions
The pensions of public officials will be limited to a maximum of two-thirds of their highest salary, less any private pensions and contributory state pensions. The emoluments of the serving President and Vice-President, and pensions of retiring Presidents and Vice-Presidents, and surviving spouses’ pensions, will become fully taxable from 1 July 2026.
Maternity and Paternity Leave
Maternity leave is being extended to 12 months, with the first six months paid at full salary and the remaining six months optional at half-pay. Paternity leave is being extended from four to six weeks.
Menstrual Leave
To foster a more inclusive and supportive workplace, Government will introduce menstrual leave in both the public and private sectors. Women experiencing severe menstrual symptoms, including dysmenorrhea and related conditions such as migraines, will be entitled to one paid day of leave per month.
Carer’s Allowance
The monthly Carer’s Allowance will increase from MUR 3,500 to MUR 4,250.
Income Support
The monthly income support payable to those persons having reached 60 years but not eligible for the Basic Retirement Pension will be increased from MUR 10,000 to MUR 10,370 with effect from 1 January 2026. Income Support for persons not eligible to the Basic Retirement Pension will be abolished from December 2026.
Public Holidays
Where a public holiday falls on a Sunday, the immediately following Monday will be declared a public holiday.
Financial Services and Regulatory Measures
The budget contains numerous measures aimed at strengthening the regulatory framework for financial services.
Banking Sector:
The Bank of Mauritius Act will be amended to allow Government to inject funds to increase its paid-up capital and strengthen its balance sheet position. The Banking Act will be amended so that the duty of confidentiality will not apply where disclosure is ordered under the Financial Crimes Commission Act or the UN Sanctions Act. The Financial Crimes Commission will be empowered to obtain information from banks for investigative purposes, including production as court evidence without requiring bank officers to attend as witnesses. Disclosure Orders for customer information may be issued by a Judge in Chambers upon application by a competent authority.
A new Bank of Mauritius Bill and a new Banking Bill will be introduced before the end of 2026, along with a Resolution Regime, strengthening governance, prudential regulation and supervision, consumer protection, and financial stability. The Bank of Mauritius will roll out a Threat Intelligence Sharing Platform for real-time cybersecurity intelligence exchange among banks. An Open Banking Framework will be introduced enabling secure sharing of customer financial data between licensed banks, virtual asset service providers, and authorised fintech providers.
Financial Services Commission (FSC):
The FSC will be empowered to conduct on-site inspections as assistance to foreign supervisory institutions. The FSC Board may delegate approval of capital expenditure up to MUR 3 million (from MUR 1 million). The FSC will also be empowered to act against misleading advertisements or promotions. A new conservatorship framework will allow the FSC to appoint a conservator over licensees facing financial or operational difficulty, with immunity for administrators and conservators acting in good faith. The FSC’s financial statements will be audited by the Director of Audit, with a statutory submission timeline. All FSC applications, including officer appointments, must be submitted via the FSC One Platform.
The FSC will introduce a shared fintech licensing and passporting framework, a modular private wealth management licence, and a pension income drawdown framework.
AML/CFT and Financial Crime:
A National Crime Agency will be set up to consolidate investigations into serious fraud, corruption, money laundering, and complex transactional crimes. The Mauritius Police Force will deploy specialised investigative tools for virtual assets, financial crime, and forensic accounting investigations. CERT-MU will establish a national fraud reporting and response mechanism for cyber fraud and scams. The ADSU will strengthen financial intelligence and use advanced analytics to track suspicious financial flows, in collaboration with MRA and FCC.
Virtual Assets and Fintech:
The Virtual Asset and Initial Token Offering Services Act will be amended to clarify that a senior executive of a virtual asset service provider must satisfy both the requirements of being a resident in Mauritius and holding a senior management position. Unlicensed persons soliciting investors in Mauritius for virtual asset transactions will be prohibited. Clear rules will be introduced for issuance and investment in stablecoins, and tokenisation of real-world assets.
Conclusion: A Calculated Gamble
The Mauritius 2026/2027 National Budget represents a calculated gamble. It seeks to be a budget of consolidation, not austerity; a budget that aims to protect the vulnerable while laying the foundations for a future-ready economy.
However, the budget proposals will materially increase the cost of doing business in Mauritius. The permanent 35% top tax rate, higher employer costs, the weakening of VAT neutrality, and the increased burden on the Global Business sector risk sending the wrong signal to the entrepreneurs, professionals, and investors that Mauritius needs to attract.
The success of this budget will depend less on its announcements and more on the speed and effectiveness of its implementation. It is a journey from reform to results, and the destination remains to be seen. Mauritius possesses many of the ingredients required to succeed in an increasingly complex global environment. By maintaining high regulatory standards, embracing innovation, investing in talent, and remaining relentlessly focused on competitiveness, the country can further consolidate its position as a leading International Financial Centre and a trusted gateway for global investment. The question that remains open is whether the cost of these reforms in terms of competitiveness has been too high.
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