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FAQs for PAYE Employee

 

  1. What is PAYE?
  2. Who is an employee?
  3. Are all employees subject to PAYE?
  4. What are emoluments?
  5. What are fringe benefits?
  6. Are all emoluments taxable?
  7. How does PAYE operate?
  8. What happens if I receive payment of an arrears of salary?
  9. How does my employer know the deductions to which I am entitled?
  10. What happens if I do not furnish an EDF?
  11. What should I do if there is a change in my deductions during the year?
  12. What if I am employed for the first time?
  13. What if I take up a new employment?
  14. What if I have more than one employer at any one time?
  15. Should I submit an income tax return at the end of the income year?
  16. How will I know my emoluments and PAYE deductions for the year?
  17. How to obtain additional information on PAYE?

  1. What is PAYE?

    PAYE is a system whereby employers are required to deduct tax from the emoluments of their employees and to pay over the tax withheld to the Mauritius Revenue Authority every month.

     

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  2. Who is an employee?

    A person who receives or is entitled to receive emoluments is an employee.Since emoluments include pension in relation to past employment, a person in receipt of such pension is treated as an employee.

     

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  3. Are all employees subject to PAYE?

    No. An exempt person is not subject to PAYE.An exempt person means an employee whose emoluments do not exceed Rs 23,077 per month.

     

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  4. What are emoluments?

    Emoluments mean any advantage in money or in money's worth which is salary, wages, leave pay, fee, overtime pay, perquisite, allowance, bonus, gratuity, commission or other reward or remuneration in respect of or in relation to the office or employment of an individual and includes fringe benefits.

    Emoluments also includes superannuation, pension, retiring allowance, compensation for loss of office or other reward in respect of or in relation to a past employment or loss or reduction of future income.

     

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  5. What are fringe benefits?

    A fringe benefit is any advantage in money's worth provided by an employer to an employee. It forms part of emoluments and is subject to PAYE.

    Fringe benefits include housing benefit, car benefit, tax benefit, interest free loan benefits, free meals to employees, full board and lodging to expatriates, personal expenses of the employee which are borne by his employer and any other advantage in money's worth. The taxable values of fringe benefits are given in Annex II to the Guide On PAYE

     

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  6. Are all emoluments taxable?

    All emoluments are taxable except the following:

    1. Emoluments derived from the office of the President or Vice-President.

       

    2. Any rent allowance payable to a person appointed to an office in :
      • the Police Force;
      • the Fire Services;
      • the Forests Division of the Ministry of Agriculture andNatural Resources;
      • the Prisons and Industrial School Service; the Ministry of Fisheries;
      • the Department of Civil Aviation;
      • the Fire Unit of the Mauritius Marine Authority.

       

    3. Any housing allowance not exceeding Rs 100 per month payable by an employer to an employee under any enactment or by virtue of an award made under an enactment.

       

    4. Any transport allowance payable by an employer to an employee by virtue of the terms and conditions of service equivalent to :
      • the return bus fare between residence and place of work;
      • petrol allowance, commuted travelling allowance and travel grant payable by the Government of Mauritius and the local authority to their employees; or
      • the actual petrol or travelling allowance paid or 25% of the monthly basic salary up to a maximum of Rs 11,500 , whichever is the lesser, provided that the employee makes use of a private car registered in his own name for attending duty and for the performance of the duties of his office or employment.

       

    5. Passage benefits provided under a contract of employment not exceeding 6% of the basic salary.

       

    6. The first Rs 2 Million of the aggregate amount received:
      1. as lump sum by way of commutation of pension or by way of death gratuity or as consolidated compensation for death or injury, and paid :
        • by virtue of any enactment;
        • from a superannuation fund;
        • under a personal pension scheme approved by the Director-General;
      2. as lump sum under the National Savings Fund Act;
      3. by way of retiring allowance;
      4. by way of severance allowance determined in accordance with the Labour Act,
      on such conditions as may be prescribed.

       

    7. Any payment of foreign service allowance, reimbursement of the cost or payment of personal and private expenses including medical expenses, to homebased staff of overseas mission.

       

    8. Any advantage in money or in money's worth received as lump sum by an employee voluntarily terminating his contract of employment in the context of a factory closure pursuant to the Cane Planters and Millers Arbitration and Control Board Act or under the Voluntary Retirement Scheme under the Sugar Industry Efficiency Act  2001.

       

    9. Any benefit to an employee for a payment by his employer to provide a pension or retiring allowance for the employee or his dependants and which is an allowable deduction under section 22 or 61, as the case may be.

       

    10. Any benefit to an employee for a payment by his employer to a scheme approved by the Director-General to provide against medical expenses for the employee or his dependants and which is an allowable deduction under section 22 or 61, as the case may be.

       

    11. Emoluments of a non-citizen who holds office in Mauritius as an official of a Government other than the Government of Mauritius and is posted to Mauritius for that purpose.

       

    12. Any foreign service allowance payable under a contract of employment to staff of statutory bodies posted abroad, as may be approved by the Director-General.

       

    13. Any retirement pension not exceeding the income exemption threshold in respect of Category A payable to a citizen of Mauritius who is not resident in Mauritius.

       

     

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  7. How does PAYE operate?

    For each pay period, your employer is required to deduct from your emoluments the income exemption threshold to which you are entitled in order to arrive at your chargeable income if any. The tax to be withheld is then computed by applying the relevant tax rate.

    The total exemptions and reliefs (see Annex) that is deducted in a pay period is the total exemptions and reliefs for the year divided by the total number of pay periods in the tax year. Payment of end of year bonus is counted as an additional pay period. So if you are paid monthly, your total exemptions and reliefs is divided by 13, and if you are paid weekly, by 56.

     

     

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  8. What happens if I receive payment of an arrears of salary?

    Where arrears of emoluments earned in an income year are received by a person in the following or any subsequent income year, those emoluments are deemed to have been earned in the income year in which they are received and are subject to PAYE in the pay period in which they are paid.

     

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  9. How does my employer know the deductions to which I am entitled?

    An employee who is affected by PAYE and wish to entitle for exemptions and reliefs for an income year (1st July to 30th June) to be taken into account for the purpose of calculating the amount of tax, if any, to be withheld from his emoluments. should submit an Employee Declaration Form (EDF) to his employer.The EDF can be downloaded from the MRA website.

    An EDF should be submitted at the beginning of every income year so as to avoid unnecessary withholding of tax.

     

     

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  10. What happens if I do not furnish an EDF?

    If you are not an exempt employee, tax will be withheld at the flat rate of 15%. Please note that an EDF may be filled at any time during an income year. Your employer will take into account your exemptions and reliefs in calculating the amount of tax to be withheld in the future pay periods in that income year.

     

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  11. What should I do if there is a change in my deductions during the year?

    As an employee you should ensure that the amount claimed as total exemptions and reliefs in your EDF is correct. Where during an income year, there is a change in the total exemptions and reliefs to which you are entitled, you may at any time in that income year furnish a fresh EDF to your employer claiming the revised amount of the exemptions and reliefs. Your tax liability for the remaining pay periods will be adjusted accordingly.

     

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  12. What if I am employed for the first time?

    Where you take up employment for the first time, you should, unless you are an exempt person, furnish to your employer an EDF duly filled in.

     

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  13. What if I take up a new employment?

    You should, unless you are an exempt person, furnish a declaration to your new employer.

     

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  14. What if I have more than one employer at any one time?

    You should furnish an EDF to ONLY one of your employers. Except if you are an exempt employee, the other employers will withhold tax from your emoluments at the flat rate of 15%.

     

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  15. Should I submit an income tax return at the end of the income year?

    Tax deductions under PAYE are provisional payments of tax. A return should be filled in after the end of an income year to ascertain the final tax liability for that year. A return should be submitted to the MRA in case you:

    (a) have an additional tax liability for the year,

    (b)are entitled to a refund of the tax paid in excess.

     

     

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  16. How will I know my emoluments and PAYE deductions for the year?

    Every employer is required by law to give not later than 15th August following an income year, to each employee employed by him during that income year, a Statement of Emoluments and Tax Deduction.

    You should insert details of the Statement of Emoluments and Tax Deduction while filling your return.

     

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  17. How to obtain additional information on PAYE?

    Refer to Guide On PAYE or Contact MRA Help Desk on 207 6000

    Annex

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