PAYE

 

  1. What is PAYE?
  2. Main Characteristics
  3. Personal Reliefs & Deductions
  4. Calculation and withholding of tax
  5. Cumulative PAYE System
  6. Remittance of PAYE withheld

  1. What is PAYE?

     

    Pay As You Earn (PAYE) is a system whereby employers are required to withhold tax from the emoluments of employees chargeable to tax at the time the emoluments are received by or made available to the employees. The tax withheld is then remitted to the Mauritius Revenue Authority (MRA) every month.

     

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  2. Main Characteristics

     

    The main characteristics of the cumulative PAYE system are:

     

    1. Employees drawing monthly emoluments not exceeding one thirteenth of Cat A of the Income Exemption Threshold are not subject to PAYE.

       

    2. However, an exempt person or person deriving pension, annuity or similar payments may request his employer/payer to withhold PAYE from such payments by completing an authorisation form. The employer/ Payer is then required to withhold PAYE at the rate of 15%. Kindly click here for the authorisation form.

       

    3. Director fees paid by a company or fees paid by a statutory body to any member of its Board, Council, Commission, Committee are subject to PAYE at the rate of 15%.

       

    4. Workers receiving their pay daily after each day’s work are excluded from the operation of the PAYE system.

       

    5. The PAYE system operates on the payment of emoluments at the time the emoluments are received by or made available to the employee.

       

    6. Arrears of salary are taxed in the period in which they are paid.

       

    7. Arrears of emoluments earned in an income year but received by a person in the following or any subsequent income year will be deemed to have been earned in the income year in which they are received.

       

    8. The amount of tax to be withheld from the emoluments of each pay period is calculated on a cumulative basis by cumulating both the emoluments and the Exemptions and Reliefs pertaining to the current and previous pay periods in the income year concerned.

     

  3. Personal Reliefs & Deductions

     

    Employees have to furnish every year to their employer an Employee Declaration Form (EDF) claiming the Exemptions and Reliefs to which they are entitled in an income year.

     

    Kindly click here for more information.

     

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  4. Calculation and withholding of tax

     

    Every employer should, at the time emoluments are received by or made available to his employees, withhold tax from those emoluments by reference to the chargeable income of the employees.

     

    Refer to Guide on Pay As You Earn

     

    The amount of tax to be withheld should be in whole rupees. Cents should be left out.

     

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  5. Cumulative PAYE System

     

    Under the cumulative PAYE system, the employer is required to follow the following steps to calculate the PAYE to be withheld in a month:

     

    1. Calculate the taxable emoluments from the month of July of the current income year up to the current month.

       

    2. Calculate 1/13 of the total Exemptions and Reliefs claimed by the employee in his EDF to determine the monthly Exemptions and Reliefs to which the employee is entitled.

       

    3. Calculate the cumulative Exemptions and Reliefs by multiplying the item at (II) above by the number of months considered at item (I) above. The month in which the statutory end of year bonus is paid is considered as the 13th month.

       

    4. Apply tax at the rate of 15% on the chargeable income which is arrived at by deducting the amount arrived at in item (III) above, from the amount arrived at in item (I) above. Any negative value is taken as zero.

       

    5. Deduct the amount of PAYE already withheld for the previous months starting with the month of July of the current income year from the tax amount arrived at item (IV) above to obtain the amount of PAYE withheld for the current month. Any negative value is taken as zero.

       

    Kindly refer to illustrations in our Guide on PAYE for more information in respect of the cumulative PAYE system and tax to be withheld.

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  6. Remittance of PAYE withheld

     

    Employers are required to submit a monthly PAYE return electronically and include therein the details of all employees. At the same time pay to MRA the amount of PAYE withheld.

     

    The due date where both the monthly PAYE return and the payment are made electronically is the end of the month following that in which PAYE was withheld. In any other case the due date is 20 days after the end of the month in which PAYE was withheld.

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