Tax Reforms and Allowance Reductions
The Mauritius Revenue Authority (MRA) has undertaken significant tax reforms, notably the abolition of Income Exemption Thresholds (IET) and the introduction of a new progressive tax system effective July 1, 2023. This reform also saw the abolition of the Solidarity Levy. Under the new system, tax deductions are now based on the number of dependents, aiming to simplify Pay As You Earn (PAYE) calculations and adjust tax rates. These changes have contributed to public discussions regarding financial strain on citizens.
Introduction of the 14th-Month Payment
In response to rising cost-of-living concerns and as a key pledge during the 2024 election campaigns, Mauritius has implemented a mandatory 'Special Allowance 2024,' widely referred to as the 14th-month payment or bonus. This initiative, supported by both ruling and opposition parties, was officially approved by Cabinet on December 13, 2024, and subsequently enacted under the Special Allowance Act 2024.
Eligibility and Disbursement Details
The 14th-month payment is applicable to employees in both the public and private sectors who earn a monthly basic salary of up to MUR 50,000. The allowance is equivalent to one month's basic wage or salary, including any wage relativity adjustment, up to the specified maximum. Employers have several options for disbursement:
- A single installment in December 2024.
- Two installments: 50% in December 2024 and the remaining 50% in January 2025.
- Up to four equal installments between December 2024 and March 2025, subject to agreement with employees.
The Special Allowance is subject to income tax under the cumulative PAYE system but is exempt from Social Contribution (CSG).
Employer Support and Economic Impact
To mitigate the financial burden on businesses, the Mauritius Revenue Authority (MRA) has been tasked with providing financial assistance to eligible employers. This support is primarily directed towards:
- Export Oriented Enterprises (EOEs)
- Small and Medium Enterprises (SMEs) with an annual turnover not exceeding MUR 100 million for the 2023-2024 assessment year.
- Charitable organizations.
As of March 2025, the MRA had distributed over MUR 765 million to 6,781 eligible employers to facilitate the payment of this special allowance. While the measure aims to provide immediate financial relief to employees, organizations like Business Mauritius have expressed concerns regarding its long-term economic sustainability, suggesting that such initiatives should ideally be linked to productivity or profitability.
5 Comments
Mariposa
It's commendable that the government is addressing cost-of-living issues with this allowance. However, the accompanying tax reforms earlier this year also contributed to financial strain for some, creating a complex financial picture.
Muchacha
They give with one hand and take with the other through tax reforms. It's a shell game.
Bella Ciao
Why isn't this linked to productivity? It's a band-aid solution, not real growth.
Comandante
This is unsustainable. It will cripple businesses, especially smaller ones.
Bermudez
This initiative certainly helps low and middle-income earners during difficult economic times. But without a clear plan for how this will be sustained or linked to economic output, it risks becoming a short-term fix with potential long-term issues.