Mauritius has come a long way since its independence. The country is classified as an upper-middle-income economy and is ranked 13th out of 190 for ease of doing business. It is transforming into a lucrative business destination, and several companies are now setting up their subsidiaries in Mauritius. Mauritius is ranked 45th in the Prosperity Index, and it is one of the most developed nations on the African continent. It has a low corporate tax rate of 15% with no capital gains and dividend distribution tax. Also, you have access to a diverse set of people who can be a part of your organisation.
You must set up their payroll when you are onboarding people as employees. It is essential to set up a standard payroll process in Mauritius, and it should comply with all the rules and regulations of the country.
You can take assistance from a Global PEO like Multiplier, who can aid you in setting up a payroll system in Mauritius.
How Is Payroll Calculated in Mauritius?
Payroll is an integral part of any organisation’s operations. So while hiring skilled employees, it is essential to set up payroll in Mauritius. However, before establishing a system, you should understand the significant differences between the gross and net pay.
Gross salary is the aggregate amount an employee earns. It includes everything like tax, social security contributions, etc. However, you get the net salary when you remove all the mandatory deductions from the gross pay, like taxes, etc. Some deductibles that you must take into consideration are income taxes and other deductions like CSG and NSF contributions
According to Section 33A(1) of the Workers’ Rights Act 2019, all companies should pay a special allowance to their employees. The company’s policies will govern the amount the company needs to pay as a special allowance.
The National Solidarity Fund contribution is also an essential part of the payroll in Mauritius. The employees must contribute 1% of their basic pay to this fund, and they can contribute a maximum of MUR 19,900 to NSF.
When establishing a Mauritius payroll process, you must consider different factors like minimum wages, overtime, bonuses, mandatory deductions, etc. You should also have a payroll record in place.
Important Elements of Salary Structure in Mauritius
Components of the salary structure in Mauritius are:
CTC
Cost to Company, also known as CTC, includes all the components of payroll such as gross salary, net salary, basic pay, allowance, and other deductions. It is different from the in-hand salary that employees get.
Gross Salary
The gross salary is calculated before making the tax deduction or any other deduction. It includes basic pay, bonus, taxes, and other differentials.
Net Salary
After deductions, employees receive this take-home pay. Company policies and employment laws usually decide deductions.
Basic Salary
The basic salary constitutes 35-50% of the gross salary. It is calculated before any deduction or increase (bonus, overtime, etc.). It is based on employee designation in the company and the industry functioning.
Allowances
Allowances are paid to employees throughout their employment. It varies across companies and their policies. Moreover, allowances can also be fully or partially taxed. Some common allowance types include:
- Meal allowance
- Transport allowance
- Medical allowance
- Housing allowance
- Bonuses
Employees in Mauritius are entitled to a year-end bonus. The bonus amount is equivalent to 1/12th of the employees’ annual salary. The payroll policies and procedures in Mauritius allow the payment of a yearly premium.
How to Set Up a Payroll in Mauritius?
Establish a few core steps to set up the Mauritius payroll process. Once you establish a subsidiary in Mauritius, you can start setting up your payroll. The stages of setting up a payroll in Mauritius are:
Step 1:
The companies should register themselves to the Registrar of Companies. You must acquire the company identification number and the certificate of incorporation from the Registrar.
Step 2:
Once registered, in-country bank accounts are mandatory to ease the transactions.
Step 3:
Now, set up profiles on different state and federal tax portfolios and obtain tax and financial data from the workforce. Register your business with the nation’s current tax systems as well.
Step 4:
Examine each employee’s hourly schedule to determine the additional overtime, pay for employees and check the overtime schedule.
Step 5:
Determine each employee’s gross and net salaries while accounting for any required deductions.
Step 6:
Now, establish your company’s payroll structure in Mauritius.
Step 7:
Decide on the payment cycle for different categories of employees working in your organization.
Step 8:
Set a date for each month when you will pay your Mauritius payroll taxes. In addition to filing payroll tax returns, pay the payroll tax contributions to the local tax office.
A Step-by-Step Process of Payroll Processing in Mauritius
Establishing a payroll in Mauritius can be lengthy. However, it will not cause any problems if you take a step-by-step approach. The standard payroll processing involves the following steps:
Choose the payroll system
Companies have the option to choose among different payroll systems. They can either choose to manually process the entire payroll, or they can outsource the payroll processing system. You will have additional onboard resources if you manually process the company’s payroll. However, if you take the help of a Global PEO like Multiplier, they will manage the entire payroll process for you.
Payroll policy
You need to have a payroll policy before paying your employees. The payroll policy should include clauses on payments of allowances, payroll cycle and any other clause that will govern the payroll procedures in the company.
Registering employees to the payroll system:
To use the business payroll system, employees must first register with HR. The payroll system gathers data from all employers as it needs to be collected and stored. Employers must supply the following details about their employees to register:
- Number of employees in the organisation
- The kind of payroll software used
- Timeline followed for payroll processing
- All employees’ personal information includes names, date of birth, etc.
- Set up bank accounts for your employees
Once the employees are registered to the payroll system, you need to set up bank accounts for all your employees. You can then make all the salary payments to your employees in these bank accounts.
Verification of timesheets and Calculate the salary
The employees are entitled to overtime payments. In order to calculate the overtime amount, you need to verify the timesheets of all of your employees and then come to a final overtime amount figure for different employees working in the organization.
Also, you need to factor in several other expenses that the employees have incurred while calculating the final salary amount. This may include travel expenses, mobile phone expenses, etc. You need to provide reimbursements for these expenses while paying out the salary. However, the limits of these reimbursements will be as per the company policy. Now that you have factored in all the elements, you can calculate the salary payable to the employees.
- Double-check for errors: Cross-verify all relevant components before final payroll processing, to prevent mistakes. Reviewing your tax records, general ledger, and payroll register will allow you to finish the payroll reconciliation procedure. Processing employee payments are possible only if you are confident about the computations. Employee pay stubs are viewable through the payroll software system.
- Roll out the payslips: All employees must get payslips from their employers, either in print or digital form. A payslip must include the employee’s and employer’s details and the employee’s compensation package, including base pay, bonuses, TDS, and other compensation. It also mentions the deductions and contributions made on the employee’s behalf. Nowadays, most businesses in Mauritius utilise integrated payroll processing tools that let employees check their pay slips monthly.
- Payroll records: Employers must enter each transaction in the payroll records of their company once all payslips are distributed. Keep this record safe for a minimum of ten years. They demonstrate that all workers received the appropriate salaries.
Payroll Contributions
The payroll contributions in Mauritius include different components. Some of these contributions include
Minimum wage
Every company needs to consider the minimum wage before formulating a salary structure. The minimum wage for employees in the export industry is MUR 9,875, and the minimum wage for the employees working in the non-export sector is MUR 10,575.
Overtime
A typical work week in the corporate sector is 40 hours and 45 hours in trade and commerce.
- Employees who work more than the required hours are remunerated at 1.5 times the regular hour’s rate.
- In Mauritius, working on a Sunday or a public holiday also counts as overtime. The pay rate is double the hourly average if the employee works on a Sunday or a public holiday.
Employer Contribution
The employers contribute a percentage of the basic income of their employees to social security accounts. The contributions go to the NSF and CSG accounts.
| Level of Income | Contribution by the employer |
| < MUR 50,000 per month | 3% |
| > MUR 50,000 per month | 6% |
Employee Contribution
The employees make contributions to NSF and CSG from their basic salary in Mauritius.
| Level of Income | Contribution by the employee |
| < MUR 50,000 per month | 1.5% |
| > MUR 50,000 per month | 3% |
Taxes in Mauritius
Employees are required to pay a tax on their income in Mauritius. However, the tax rate levied on personal income is relatively low compared to other countries. The following tax rates are applicable to the income of the employees.
| Income level | Income tax rate |
| < MUR 650,000 | 10% |
| > MUR 650,000 | 15% |
Mauritius follows a flat rate system with only two tax brackets, and a flat rate is applied based on the employee’s income. Non-Mauritian employees also have to pay tax on Mauritius’s source of income.
National Pension Fund/Contribution Sociale Generalisee (CSG)
According to the Finance Bill 2020, the CSG has replaced the National Pensions Fund (NPF) pension system as of 1 September 2020. Depending on their compensation, each employee and their employer must pay CSG at the established rates. An employee can be full-time, part-time, or self-employed; a public sector employee is not considered a participant. Check the CSG rates below:
| Income Level | Employee’s contribution | Employer’s contribution |
| Public sector employees | ||
| < MUR 50,000 per month | 1.5% | 3% |
| > MUR 50,000 per month | 3% | 6% |
| Regular employees | ||
| < MUR 50,000 per month | 1.5% | 3% |
| > MUR 50,000 per month | 3% | 6% |
For a domestic service employee with a salary less than MUR 3,000 who works for different employers, the employers make a 3% contribution to the social security accounts.
National Savings Fund
It is mandatory for employees in Mauritius to contribute to the National Savings Fund.
- Employers must pay a monthly levy of 1.5 percent of all employees’ basic salaries and wages and 2.5 percent of remuneration to the NSF.
- Employers with employees whose total basic pay or compensation does not exceed MUR 10,000 are required to pay a tax of 1% from July 2019 to June 2020.
- There is a 1% levy that employees must pay, up to a maximum of MUR 187 every month.
Payroll Cycle
In Mauritius, the payroll cycle works from month to month. Salary is paid by the end of every month. Work completed between the first and last day of the month is usually paid at the end of the month. Instead of every two weeks in most other parts of the world, employees receive their payslip and salary once a month. Employers must keep payroll reports for each employee for at least ten years.
Mauritius Payroll Options for Companies
There are several payroll options for companies in Mauritius. You can choose from these options based on your requirements, budgets, available resources, etc.:
- Internal payroll: Implementing an internal payroll is an excellent choice if you own a big business and want to commit to Mauritius completely. You will need to hire an entire HR team to handle a vast payroll and ensure you have the necessary funding.
- Remote payroll: If you have a parent company, you can use their payroll. You can get all your employees added to the payroll system of your parent company. However, different payroll laws will apply to different categories of employees.
- Payroll processing company: To outsource your payroll, you can collaborate with a Mauritius payroll processing business. However, you’ll still be responsible for compliance-related issues.
- PEO company: You can also outsource your payroll to PEO companies like Multiplier. The Global PEO will take care of the entire payroll processing and compliances, and you can focus on expanding your business in Mauritius.
Entitlement and Termination Terms
Before setting up your Mauritius payroll, it is typically advised that you create the entitlement and termination provisions in an employee contract. In Mauritius, employees who have worked for more than three years per a fixed-term contract can be terminated with three months of written or verbal notice.
Different notice periods apply to employees with fewer than three years of service. Severance pay is generally due to employees depending on their length of service, the reason for termination, and the pay period.
Mauritius Payroll Processing Company
You might find it complex to expand into Mauritius if you don’t know how payroll is processed and set up in Mauritius. It would be wise if you seek assistance from some industry leaders or companies that are well versed with the local laws and know how to set up payroll in Mauritius.
There are several firms out there that can help you in navigating through the process. You can partner with a global PEO firm like Multiplier. You can weigh all your options, pick one that meets your company’s requirements and ease the process of setting up a payroll in Mauritius.
How Multiplier Can Help with Global Payroll?
Processing payroll in Mauritius is complex and influenced by numerous factors. You can get in touch with Multiplier, a global PEO solution. Our experts thoroughly understand the Mauritius Federal Laws and can help you with the entire process. Also, we will ensure that your payroll system is fully compliant.
Our payroll solution ensures flawless operation, 100% payroll accuracy, and compliance.