Mauritius's Finance Act 2026/27 has come into effect with sweeping changes for taxpayers and investors. The most discussed measure: the creation of a 35% income tax bracket for annual incomes exceeding Rs 12 million (approximately €240,000). This marks a major shift for a country whose flat tax of 15% then 20% was one of the cornerstones of its international appeal.
The End of the Flat Tax Model?
The measure abolishes the Fair Share Contribution and replaces it with a new progressive schedule. The top marginal rate rises from 20% to 35% — nearly doubling for the highest earners. The stated goal: broaden the tax base in a context of fiscal discipline and adjustments recommended by the IMF, which itself called on Mauritius to strengthen its budgetary accountability framework.
PwC Mauritius published a critical analysis, warning that this change could "negatively influence the decisions of foreign entrepreneurs and talent to establish themselves" on the island. Since 2009, 11 new taxes have been introduced in Mauritius, primarily targeting businesses, the financial sector and digital services.
A Cascade of Other Measures
The Finance Act 2026/27 goes beyond the income tax revamp. It eases the Corporate Climate Responsibility (CCR) Levy by allowing offset through investment tax credits. It also introduces taxation of non-resident ICT providers for foreign digital services — a move that could strain certain trading relationships. Finally, the VAT reclaim window is cut from 36 to 24 months, creating an imbalance with the four-year window granted to the tax authority (MRA).
Why It Matters
Mauritius built its reputation as a regional financial hub on competitive and predictable taxation. The rising fiscal pressure — particularly through this 35% bracket — reopens the debate on balancing budget consolidation against attractiveness for international investors and talent. The reaction of the market and major advisory firms over the coming weeks will be key to measuring the real impact on inbound investment flows.
Source: Defimedia / PwC Mauritius, Finance Bill 2026; île-maurice.com; Finance Act 2026/27