JULY 2026 – MAURITIUS
2026/2027 BUDGET – KEY CHANGES FOR EMPLOYERS
It is important that employers note the following:
Tax and employment changes announced in the Budget Speech
Mauritius’ 2026/27 budget was delivered on 19 June 2026 and introduces several notable changes affecting employment taxation, statutory benefits and labour practices. The measures are aimed at strengthening social protection, modernising payroll-related frameworks and enhancing employee benefits.
Key effective dates (proposed)
- Tax changes affecting employees and employers: Expected to take effect from 1 July 2026, subject to promulgation of the relevant legislation.
- Employment measures: Expected to take effect from 1 July 2026, subject to promulgation of the relevant legislation.
- State Age Pension (SAP): Effective 1 January 2027.
- National Pension and Provident Fund (NPPF): Effective 1 July 2027.
Tax changes affecting employees and employers
New personal income tax band
- A new top marginal tax rate of 35% will apply to annual chargeable income exceeding MUR 12 million.
- This replaces the Fair Share Contribution, which will be abolished.
- Existing lower tax bands remain unchanged.
Increase in tax-exempt lump sum benefits
- The tax-exempt threshold for lump-sum pension, retiring allowance and severance allowance will increase from MUR 3 million to MUR 3.5 million. This will reduce the taxable portion of qualifying lump-sum payments made to employees on retirement or termination.
Tax exemption for qualifying expatriate employees
- A four-year income tax exemption will be introduced for qualifying expatriate employees working for companies engaged in the manufacture of solar photovoltaic systems.
Employment measures
The budget proposes several enhancements to employee leave entitlements:
Maternity leave
- Extended to 12 months, comprising:
- 6 months on full pay, followed by
- 6 months on half pay.
Paternity leave
- Increased from 4 weeks to 6 weeks.
Menstrual leave
- Introduction of 1 paid day of menstrual leave per month for women experiencing severe menstrual symptoms.
State age pension
The Budget proposes significant structural reforms to the Mauritian pension system:
- The Basic Retirement Pension (BRP) will be replaced by the State Age Pension (SAP) from 1 January 2027.
- The SAP is a broader social security reform aimed at enhancing sustainability and targeting support.
- It is primarily a government social security reform rather than a payroll change.
National Pension and Provident Fund (NPPF)
- From 1 July 2027, the current National Pension Fund (NPF) and related social security frameworks are expected to be replaced by the NPPF.
- The new system will introduce individual retirement savings accounts.
- Existing NPF pensions are expected to continue unchanged.
These proposals are not yet enacted and are pending promulgation of the Finance Bill 2026 and the Economic and Financial Measures (Miscellaneous Provisions) Bill 2026.
Should there be any material changes during the legislative process, an updated communication will be issued.
To view the 2026/2027 Budget Speech and annexures, follow the link.
