Retirement: A reform that mainly affects long-term residents
The flagship measure of the budget remains the replacement of the Basic Retirement Pension (BRP) with a State Age Pension (SAP) from January 1, 2027. For most expatriates working in Mauritius, however, this change is unlikely to have an immediate impact. The Mauritian state pension is generally not their primary source of retirement income, as most continue to rely on pension schemes in their home country or on private retirement savings. That said, if you plan to settle in Mauritius for the long term or retire there and meet the eligibility requirements, this reform deserves your attention.
The new system will offer greater flexibility by allowing people to claim their pension between the ages of 60 and 70. Claiming before the age of 65 will result in a permanent reduction of 0.5% per month, meaning someone retiring at 60 could receive up to 30% less than the full pension. Conversely, delaying retirement beyond 65 will increase the pension by 0.75% per month, up to a maximum 45% increase for those retiring at 70.
One of the budget's most significant announcements was the proposed creation of a National Pension and Provident Fund (NPPF), which was intended to overhaul Mauritius' contributory pension system by replacing the Contribution Sociale G茅n茅ralis茅e (CSG) and redefining the role of the Portable Retirement Gratuity Fund (PRGF). That reform, however, has now been postponed.
On July 8, Minister of Social Security Ashok Subron confirmed that all provisions relating to the NPPF would be removed from the Finance Bill. Instead, the government intends to address the reform through separate legislation following a broad national consultation involving trade unions, employers, and the wider public. This marks a significant shift from the roadmap initially outlined in the budget. The pension reform has effectively been split into two parts. The reform of the state pension (the transition from the BRP to the SAP) remains on schedule, while the overhaul of the contributory pension system has been postponed pending further consultation.
For expatriates, this announcement mainly provides short-term certainty. The current system remains unchanged: the CSG, the PRGF, and the National Savings Fund (NSF) will continue to operate until new legislation is adopted. As a result, no new pension contribution scheme will come into force for now, and employers do not yet need to modify payroll systems or employment contracts. However, many important questions remain unanswered. The government has yet to clarify whether foreign workers will be required to join the future NPPF, whether certain categories of expatriates will be exempt, or what will happen to contributions paid by employees who leave Mauritius after only a few years. The future of the PRGF and its possible integration into the new fund also remains under discussion.
Prime Minister Navin Ramgoolam has confirmed that the second and third pillars of the pension reform, namely, contributory pension schemes and voluntary private retirement plans, will require dedicated legislation and extensive stakeholder consultations before they can be implemented. The government has also confirmed that it has dropped plans for a means test, which had initially been considered as part of the pension reform. For expatriates and international businesses operating in Mauritius, the message is clear: the reform of the contributory pension system has not been abandoned, but its design, implementation timeline, and practical implications are still being developed. Until new legislation is passed, the current rules remain fully in force.
Targeted tax measures
Entrepreneurs and international companies
If you run a foreign company that does business with Mauritius, here are the key developments to be aware of:
- Non-resident companies providing software, licenses, applications, or IT maintenance services to clients in Mauritius will now be subject to Mauritian income tax. If your offshore structure invoices digital services to Mauritian clients, your tax setup is worth reviewing.
- At the same time, certain VAT obligations are being simplified for foreign providers of digital services, particularly where those services are supplied exclusively to Mauritian businesses that are already VAT-registered.
- The Global Business regime is being adjusted to bring it into closer alignment with international tax standards.
Industry and AI
Manufacturing companies will be able to benefit from a tax credit of up to 45% on certain investments in new machinery and equipment, artificial intelligence solutions, and patents. The scheme has been extended through June 30, 2029.
A highly targeted exemption to attract talent
Expats employed by companies manufacturing photovoltaic systems are set to benefit from a four-year income tax exemption. If you work in renewable energy, or your profile makes you a fit for this sector, this is a genuine tax opportunity. For everyone else, the measure is a clear signal of the government's new approach: concentrating tax incentives on strategically targeted sectors rather than offering broad-based benefits.
Proceed with caution before buying property
Thinking of purchasing property through an Economic Development Board (EDB) scheme? Whether it's a Property Development Scheme (PDS), Smart City, or another scheme open to foreign buyers, the government is planning to revise the duties and taxes that apply to these acquisitions. The details, however, have not yet been published. If your property purchase in Mauritius isn't urgent, it may be worth waiting for the Finance Act and its implementing regulations before signing anything.
