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WEEK 2 – PAYROLL

Payroll –
List of salaries paid to all employees.

Pay – Salary
Roll – Register

Employees vs Employers

Employers –
person, firm or other entity which pays for or hires the services of another person

Employee-
person who has entered into agreement or contract governed by the Employments Right Act

Obligations of Employers
In addition to the payment of compensation to the employee, the Employer in Mauritius is liable for
several types of obligations

Social obligations: monthly

NPF
in order to provide a pension for employees paid by the Government of Mauritius, the National Pension
Fund (NPF) was set up in Mauritius in 1976. It obliges the Mauritian employer to contribute both to the
employer's share but also by retaining for the part employed, at amounts varying in total from 9% to
13.5% (at 1/1/2018).
National Pension Fund (NPF) includes the idea that one ought to earn a reasonable proportion after
pension age of what one earned during one’s working life. If you have contributed to the NPF and built up
your pension points, you will get a pension which, when added to your old-age pension will be a
reasonable.

NPF Contribution Rate

Employee Employer Government
Insured Person
share share share
Every prescribed employee in the Sugar Industry 3% 10.5% -
Every other prescribed employee (higher rate) 5% 8.5% -
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An employee in domestic service or an agricultural

worker whose remuneration from all his employers does
not exceed Rs 3,000, is not required to pay the employee - 6% 3%
share of contribution which will be paid by the
government.
Every other employee other than a public officer or an
3% 6% -
employee entitled to pension under pension law
Every self-employed or non-employed or prescribed
person approved by Minister may contribute in multiples
- - -
of Rs 5 not below Rs 185 and not exceeding Rs 1,065 for
a month

The Levy Training, paid by the employer

Training levy is basically a technique to acquire funds to sustain the training policies that it formulates, so
that the people can learn new skills and techniques.

HRDC Training Levy Every employer is required to pay training levy at the rate of 1.5 % of the total basic
wage or salary of its employees other than a household worker. For periods from July 2019 to June 2020,
an employer is required to pay levy at the rate of 1% for employees whose total basic wage or salary does
not exceed Rs 10,000.

NSF
The National Savings Found (NSF); also at the employer's expense
The objects of the Fund shall
(i) be to provide for the payment of a lumpsum to every employee on his retirement or in respect of every
employee , at the time of his death.
(ii) To set up and operate for the benefit of employees , such schemes, including loan schemes, as may be
prescribed.

Money credited to the Fund:

(i) Contributions of 2.5% from every employer , in resect of every employee
(ii) Contribution of 1% deducted from every employee of the private sector , with regards to Transitional
Unemployment Benefit
(iii) Recycling Fee payable under section 47 of the Employment Rights Act 2008
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Money paid out from the Fund:

(i) Lumpsum payments
(ii) Transition Unemployment Benefits
(iii) Cost of administering the Fund

The difference between money credited to the fund and money paid out from the Fund is called Surplus
Fund.

The Surplus Fund may held on deposit with the Government , loaned or invested in such manner as the
NPF/NSF Invesment Committee set up under Section 38 of the NationalPensions Act may determine ,
having due regard to –
(i) The need for an appropriate level of liquidity in the Fund
(ii) The need to secure future value of the Fund
(iii)Any advice received from the NSF Technical Committee.

Wages or salaries on which contributions & levy are payable

NPF and NSF are payable at the prescribed rate on an employee’s basic wage/salary. Basic
wage/salary includes yearly salary compensation but excludes bonus and any other allowance paid in
cash or given to the employee in kind. The minimum and maximum basic wage/salary on which
contributions are payable are given in the table below:

INSURABLE SALARY (Effective as from 01 July 2019)

MINIMUM WAGE
Pay period MAXIMUM
Private Household employees Employees in other WAGE
(only) sectors
Daily 70 111 721
Weekly 420 663 4,325
Fortnightly 840 1,327 8,649
Half Monthly 910 1,438 9,370
Monthly 1,820 2,875 18,740

Employees contribute to NSF and NPF (1% and 3% respectively) based on their respective basic salary.
The basic salary is limited to Rs 18740.
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For example if an employee earns Rs 25,000 the

NPF = 3% X 18,740 = Rs 562
NSF = 1% X 18740 = 187
If Employee earns Rs 15,000
Since basic less than Rs 18740
NPF = 3% X 15000 = Rs 450
NSF = 1% X 15000 = 150

Note: Always round off NSF and NPF value

NPF & NSF In Case of Absentism (For employees not entitled for Local and Sick Leaves)

NPF = 3% X (Basic – Absence)

NSF = 1% X (Basic – Absence)

Tax Obligations:
PAYE
The Pay As You Earn (PAYE) system is a withholding tax deducted in Mauritius every month by the
Employer and paid to the Mauritius Revenue Authority (MRA).

Emoluments
"Emoluments" mean any advantage in money or in money's worth and include: -

➢ Salary, wages, leave pay, fee, overtime pay, perquisite, allowance, bonus, gratuity, commission
or
➢ Other reward or remuneration in respect of or in relation to the office or employment of an
individual and any fringe benefits
➢ Superannuation, compensation for loss of office, pension (including a pension to a former
employee or to the surviving spouse of that employee), retiring allowance, annuity or other
reward in respect of or in relation to past employment or loss or reduction of future income of
an individual, whether receivable by that individual or by any person who is or has been the
spouse or dependent of that individual. Emoluments also include

a) A remuneration to the holder of any office and fees payable to the director of a company,
b) An allowance under the National Assembly Allowances Act or a pension under the National
Assembly (Retiring Allowances) Act,
c) A remuneration payable to a Mayor, Chairman of a District Council or Chairman of a Village
Council under the Local Government Act 1989,
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d) An allowance under the Rodrigues Regional Assembly (Allowances & Privileges) Act, and e. An
allowance payable to an apprentice

Tax obligations: annually The Employer in Mauritius, must at the end of the year, give each of its
employees a "Certificate of Emoluments". This certificate attests to all PAYE tax deductions made at
source by the employer. It is mandatory since it then allows the employee to make his income tax return
to the Mauritius Revenue Authority (MRA) and to pay (or get the refund in case of overpayment) of his
income tax.

Note that the employer is required to keep track of all these monthly contributions and retained.
Therefore, the use of appropriate software is a guarantee of better continuity of preservation and retrieval
of information.

Income Exemption Threshold

Dependent" means either : -

a) A spouse;
b) A child under the age of 18;
c) A child over the age of 18 and who is pursuing full-time course at an educational institution or a
training institution or who cannot earn a living because of a physical or mental disability.

A spouse can be taken as dependent provided her annual income is not greater or equal to Rs 110k.
Also, if a couple has 3 children, all the 3 children shall be declared as dependent by only one partner for
example the husband or the wife. It is not allowed to split dependents 2 for Husband and 1 for Wife.
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Employee Declaration Form (EDF)

The employer shall take into account the amount of exemptions and reliefs claimed by an employee in his
EDF to calculate the amount of tax to be withheld under the system.
For an employer to know in which category an employee falls, he should request the employee to fill in
the Employee Declaration form when the employee joins the company. Also, all employees are required
to fill the EDF form every financial year.

Calculation of PAYE
PAYE = [ Emoluments – IET (monthly)] x Tax Rate
Emoluments = Monthly Income
IET Monthly = Threshold/13 for e.g for No Dependent Category A = 310000/13
Tax Rate = 10% to 15%
If Emoluments > 53,846 (700000/13) then Tax Rate 15%
If Emoluments less or equal 53,846 then Tax Rate 10%

Example for Calculation of PAYE

Basic Salary = 30k
Travelling Allowance = 2k
Phone Allowance = Rs600
No Dependent IET = 310,000
Calculate PAYE
Emoluments = 30K (All income Phone and Travelling Allowance Exempted)
PAYE = {(30000)- (310000/13)} x 10%
PAYE = Rs 615
10% because Emolument less than 53,846

What are fringe benefits?

A 'fringe benefit' is a "payment" to an employee, and form part of the employee's emoluments. A "fringe
benefit" therefore is any advantage in money's worth which is offered to an employee in respect of or
relation to his employment.
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Are fringe benefits taxable?

A fringe benefit includes rights, privileges or services in money's worth that an employer provides to his
employee and is taxable and must be included in the employee's emoluments. However a payment by an
employer-
• to provide a pension or retiring allowance for the employee or his dependents; or
• to a scheme approved by the Director-General to provide against medical expenses for the employee or
his dependents; does not constitute a taxable benefit.

Types and valuation of fringe benefits subject to PAYE

Fringe benefits treated as emoluments for PAYE purposes include housing benefit, car benefit, tax benefit,
full board and lodging to expatriates or locals, personal expenses of the employee which are borne by the
employer and any other advantage in money's worth. An employer pays Fringe Benefits irrespective of
whether he is a sole trader, partnership, trusty, corporation, unincorporated association, government or
government authority.

Value of Fringe Benefit

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http://socialsecurity.govmu.org/English/Employers/Pages/Brief-on-NPF-NSF-and-Training-Levy.aspx
http://socialsecurity.govmu.org/English/Department/Pages/National-Savings-Fund.aspx
https://www.mra.mu/download/GuideToEmployersNPFNSF.pdf
https://www.mra.mu/index.php/employers/npf-nsf-contributions
https://payrollmauritius.com/en/the-obligations-of-pay-in-mauritius.html
https://payrollmauritius.com/en/the-obligations-of-pay-in-
mauritius.html.govmu.org/English/Employers/Pages/Brief-on-NPF-NSF-and-Training-Levy.aspx
https://www.mra.mu/index.php/employers/paye
https://www.mra.mu/download/PAYEGuide.pdf
https://www.rsm.global/mauritius/sites/default/files/media/budget%202019/budget_2019-20_-
_key_tax_measures.pdf