PAYE - Mauritius Revenue Authority

Pay As You Earn (PAYE) and Solidarity Levy

What is PAYE?
Main Characteristics
Personal Reliefs & Deductions
Calculation and withholding of tax
Cumulative PAYE System
Remittance of PAYE withheld
EDF: Circular Letter to Employers
Solidarity Levy

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.
Main Characteristics
1. The PAYE system operates on the pay for the current period at the time the emoluments are received or made available to the employee. Employers are thus required to withhold tax at the rates of 10%, 12.5% or 15%; whichever is applicable, from the monthly emoluments of employees and remit same to the MRA either electronically or through a computer system approved by the Director General.
2. Employees have to furnish every year to their employer an Employee Declaration Form (EDF) claiming the Income Exemption Threshold, additional exemptions and reliefs to which they are entitled in an income year. An employee receiving emoluments from more than one employer can submit an EDF to only one employer.
3. 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 total exemptions and reliefs (total deductions) pertaining to the current and previous pay periods in the income year concerned.
4. Finance Act 2020 has brought along one significant amendment in the computation of Solidarity Levy (SL). Employers are now required to calculate cumulative PAYE for Solidarity Levy (SL) where, in a month, the cumulative chargeable of the employee, excluding any lump sum payable by way of commutation of pension or of death gratuity, exceeds SLET. The rate applicable is:
  - 25% of the cumulative excess; or
  - 10% of the cumulative emoluments (excluding any lump sum payable by way of commutation of pension or of death gratuity),
  whichever is the lower.
  
  The PAYE for SL, for the current month, is then calculated by deducting, from the cumulative PAYE for SL, the PAYE for SL withheld in previous months of the income year.
  
  The PAYE for SL to be deducted from the emoluments of an employee in a month shall, in any case, not exceed 15% of the emoluments for the month.
  
  SLET - is the sum of the amount of solidarity levy exemption threshold, and is calculated by multiplying Rs 230,769 (3,000,000 ÷ 13) by the number of months from July to the current month.
5. Workers receiving their pay daily after each day`s work are excluded from the operation of the PAYE system.
6. Employees drawing monthly emoluments not exceeding one thirteenth of the Category A Income Exemption Threshold (IET) are not subject to PAYE except for the fees payable by a company to any of its directors; or by a statutory body to any member of its Board, Council, Commission or Committee. In such case PAYE is required to be withheld at the rate of 15%.
7. A person deriving pension, annuity or similar payments below the IET threshold may request his employer/payer to withhold PAYE from such payments by completing the authorisation to deduct PAYE form, available on MRA website.
8. A person who, in respect of an income year, has not submitted an Employee Declaration Form, and derives pension, annuity or similar payments not exceeding Rs 230,769 in a month, may request his employer/payer to withhold PAYE for SL at the rate of 10% or 25%; as requested by the person, from such payments by completing the authorisation to deduct PAYE form which is available on MRA website.
9. A non- citizen who is resident in Mauritius for Income Tax Purposes is required to submit an EDF to his employer in Mauritius.
10. A non-resident in receipt of emoluments, including pension, irrespective of the amount, is not entitled to any exemption and relief. His/her gross emoluments for any pay period shall represent his chargeable income for that pay period.
11. A non-resident citizen of Mauritius in receipt of any retirement pension is subject to PAYE at the rate of 10%, 12.5% or 15%, whichever is applicable, on that part of his retirement pension which exceeds the income Exemption Threshold in respect of category A.
  
  "Dependent" means either:
  1. a spouse,
  2. a child under the age of 18; or
  3. a child over the age of 18 and who is pursuing full-time education or training or who cannot earn a living because of a physical or mental disability; and
  4. a bedridden next of kin under his care.
  “Child” means:
  1. an unmarried child, stepchild or adopted child of a person;
  2. an unmarried child whose guardianship or custody is entrusted to the person by virtue of any other enactment or of an order of a court of competent jurisdiction;
  3. an unmarried child placed in foster care of the person by virtue of an order of a court of competent jurisdiction.
  "Bedridden next of kin", in respect of a person, means the bedridden father, mother, grandfather, grandmother, brother or sister of that person or of his spouse, provided the bedridden next of kin is:
  1. eligible to the carer’s allowance payable under the National Pensions Act; and
  2. under the care of that person
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 questions on EDF.

An employee may submit an EDF electronically to his employer through the MRA website.
An employer may download the EDF of his employees through the MRA website.
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Calculation and withholding of tax

Every employer should, at the time emoluments are received by or made available to his employees, withhold PAYE on emoluments and PAYE for Solidarity Levy, where applicable, from those emoluments provided that the emoluments exceed the Total Exemption and Reliefs. The amount of tax to be withheld should be rounded down to nearest rupees.

An individual having an annual net income	Rate of income tax
Up to Rs 700,000	10%
Above Rs 700,000 and up to Rs 975,000	12.5%
Above Rs. 975,000 (Solidarity Levy may apply where the annual leviable income exceed Rs 3 M)	15% and Solidarity Levy, if applicable.

ACMS refers to the Average Cumulative Monthly Salary of an employee with respect to a month and shall be calculated by dividing the cumulative emoluments of the employee (from July to the current month of the income year) by the number of corresponding months.

Employers are required to withhold PAYE for Solidarity Levy (SL) where applicable. PAYE on SL is applicable where the cumulative chargeable income (excluding any lump sum payable by way of commutation of pension or of death gratuity) exceeds the cumulative Solidarity Levy Exemption Threshold (SLET).

The rate applicable is 25% on the excess of or 10% of cumulative emoluments (excluding any lump sum payable by way of commutation of pension or of death gratuity) whichever is lower.

Note:

The PAYE for SL in a month shall not exceed 15% of the emoluments payable in that month (Please refer to illustration 19).
SLET - is the sum of the amount of solidarity levy exemption threshold, and is calculated by multiplying Rs 230,769 (3,000,000 ÷ 13) by the number of months from July to the current month.
Lump sum payments under the Pension Act, the Superannuation Fund or Personal Pension Plan are not subject to Solidarity Levy.

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 10%, 12.5% or 15%, as specified in point 4 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.
Remittance of PAYE withheld
The tax required to be withheld under PAYE should be remitted electronically through such computer system as the Director-General may approve;
1. by direct debit;
2. through such other means as the Director-General may approve;
and at the same time, submit a monthly PAYE return, electronically in respect of ALL employees whether PAYE has been withheld or not, , giving:
- the full name;
- the NIC number where the employee is a citizen of Mauritius or the identification number issued by the Passport and Immigration Office, where the employee is not a citizen of Mauritius;
- Where a non-citizen is not entitled to a NCID, the Tax Account Number (TAN) should be inserted;
- the salary, wages, overtime pay, leave pay and other allowances excluding travelling and end of year bonus; and
- the amount of tax withheld.
Tax withheld by an employer under PAYE should be paid to the Director-General within 20 days from the end of the month in which the tax was withheld in such manner as may be prescribed. In case tax withheld is remitted electronically, it should be paid on or before the end of the month immediately following the month in which the tax is withheld.

Since the tax withheld from the emoluments of employees is held on behalf of the Government and is not subject to attachment in respect of a debt or liability of the employer, remittance of tax to the MRA should not be delayed for any reason whatsoever and should always be remitted by the due date.