Corporate Tax vs Personal Tax in Mauritius: Complete Comparison 2025

Choosing between operating as a sole trader (personal tax) or incorporating a company (corporate tax) has significant tax implications in Mauritius. This comprehensive guide compares both systems and helps you determine which structure minimizes your tax burden legally.

Tax Rate Comparison at a Glance

Annual Profit	Personal Tax (Self-Employed)	Corporate Tax (Company)	Difference
Rs 200,000	Rs 0 (0%)	Rs 30,000 (15%)	Personal saves Rs 30,000
Rs 500,000	Rs 11,000 (2.2%)	Rs 75,000 (15%)	Personal saves Rs 64,000
Rs 750,000	Rs 36,000 (4.8%)	Rs 112,500 (15%)	Personal saves Rs 76,500
Rs 1,000,000	Rs 73,500 (7.4%)	Rs 150,000 (15%)	Personal saves Rs 76,500
Rs 2,000,000	Rs 223,500 (11.2%)	Rs 300,000 (15%)	Personal saves Rs 76,500
Rs 5,000,000	Rs 673,500 (13.5%)	Rs 750,000 (15%)	Personal saves Rs 76,500

Key insight: Personal tax is almost always lower for pure tax minimization purposes.

Personal (Individual) Tax System

Tax Rates (Progressive)

Tax year: Calendar year (January 1 - December 31)

Chargeable Income	Tax Rate	Cumulative Tax
First Rs 390,000	0% (Exempt)	Rs 0
Rs 390,001 - Rs 750,000	10% on excess	Rs 0 - Rs 36,000
Above Rs 750,000	15% on excess	Rs 36,000 + (excess × 15%)

Calculation Examples

Example 1: Rs 600,000 profit

• First Rs 390,000: Rs 0 tax (exempt)
• Next Rs 210,000: Rs 210,000 × 10% = Rs 21,000
• Total tax: Rs 21,000 (effective rate: 3.5%)

Example 2: Rs 1,500,000 profit

• First Rs 390,000: Rs 0
• Rs 390,001 - Rs 750,000: Rs 360,000 × 10% = Rs 36,000
• Above Rs 750,000: Rs 750,000 × 15% = Rs 112,500
• Total tax: Rs 148,500 (effective rate: 9.9%)

Key Features

Who pays: Sole traders, partnerships, self-employed individuals

Advantages:
✅ Lower tax on profits under Rs 2 million
✅ First Rs 390,000 completely tax-free
✅ Progressive rates favor smaller profits
✅ Simpler filing process
✅ Direct access to all profits
✅ No dividend tax when withdrawing money

Disadvantages:
❌ Cannot retain profits tax-efficiently
❌ All profit taxed immediately (even if reinvested)
❌ Limited tax planning options
❌ Unlimited personal liability (not tax-related, but important)

Filing deadline: March 31 (for previous calendar year)

Corporate Tax System

Tax Rates (Flat)

Tax year: Usually July 1 - June 30 (company can choose)

Company Type	Tax Rate
Standard company	15% on all profits
Export company	3% on export income
Freeport operator	3% on qualifying income
Global Business License (GBL)	15% (may get foreign tax credits)

Most common: 15% flat rate regardless of profit level

Calculation Examples

Example 1: Rs 600,000 profit

• Rs 600,000 × 15% = Rs 90,000 tax
• Effective rate: 15%

Example 2: Rs 1,500,000 profit

• Rs 1,500,000 × 15% = Rs 225,000 tax
• Effective rate: 15%

Example 3: Rs 5,000,000 profit

• Rs 5,000,000 × 15% = Rs 750,000 tax
• Effective rate: 15%

Key Features

Who pays: Private companies (Ltd), public companies (PLC)

Advantages:
✅ Limited liability protection
✅ Predictable tax rate (always 15%)
✅ Can retain profits in company for reinvestment
✅ Salary + dividend tax planning possible
✅ Corporate credibility

Disadvantages:
❌ Higher tax than personal for most profit levels
❌ Double layer: Company pays 15%, then you may pay personal tax on dividends
❌ More complex compliance (annual returns, audits)
❌ Higher accounting costs
❌ Can't access profits without dividend distribution

Filing deadline: September 30 (for June 30 year-end companies)

Direct Tax Comparison

Scenario Analysis

Let's compare the same profit levels under both systems:

Scenario 1: Rs 500,000 Annual Profit

Structure	Tax Calculation	Tax Paid	After-Tax Profit
Self-Employed	(500k - 390k) × 10%	Rs 11,000	Rs 489,000
Company	500k × 15%	Rs 75,000	Rs 425,000
Difference		Rs 64,000 more tax with company

Winner: Self-employed saves Rs 64,000

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Scenario 2: Rs 1,000,000 Annual Profit

Structure	Tax Calculation	Tax Paid	After-Tax Profit
Self-Employed	36k + (1M - 750k) × 15%	Rs 73,500	Rs 926,500
Company	1M × 15%	Rs 150,000	Rs 850,000
Difference		Rs 76,500 more tax with company

Winner: Self-employed saves Rs 76,500

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Scenario 3: Rs 2,000,000 Annual Profit

Structure	Tax Calculation	Tax Paid	After-Tax Profit
Self-Employed	36k + (2M - 750k) × 15%	Rs 223,500	Rs 1,776,500
Company	2M × 15%	Rs 300,000	Rs 1,700,000
Difference		Rs 76,500 more tax with company

Winner: Self-employed saves Rs 76,500

But Wait... It's Not Just About Tax Rates!

The Company Advantage: Retention and Reinvestment

The tax comparison above assumes you withdraw all profits. Companies have an advantage if you retain and reinvest profits.

Example: Rs 1,000,000 profit, reinvesting Rs 500,000

Self-Employed:

• Tax on Rs 1M: Rs 73,500 (must pay even if you leave money in business)
• After tax: Rs 926,500
• Reinvest: Rs 500,000
• Take home: Rs 426,500

Company:

• Company tax: Rs 1M × 15% = Rs 150,000
• After-tax profit: Rs 850,000
• Retain in company: Rs 500,000 (no additional tax)
• Take as dividend: Rs 350,000

If you take dividend:

• Dividend to yourself: Rs 350,000
• Personal tax on Rs 350,000: Rs 0 (below Rs 390k threshold)
• Total tax: Rs 150,000 (just the corporate tax)

vs Self-Employed total tax: Rs 73,500

Still better as self-employed in this example, BUT if you're retaining even more profits, company structure can be beneficial.

Salary + Dividend Strategy (Companies)

Companies can employ you as a director and combine salary + dividends:

Example: Rs 1,200,000 profit

Strategy:

1. Pay yourself salary: Rs 390,000 (tax-free threshold)
2. Company deducts salary as expense: Rs 390,000
3. Remaining profit: Rs 1,200,000 - Rs 390,000 = Rs 810,000
4. Corporate tax: Rs 810,000 × 15% = Rs 121,500
5. After-tax profit: Rs 688,500
6. Take Rs 360,000 as dividend (still below personal Rs 750k threshold)
7. Personal tax on total Rs 750,000 (salary + dividend): Rs 36,000
8. Retain Rs 328,500 in company

Total tax: Rs 121,500 + Rs 36,000 = Rs 157,500

vs Self-employed: Rs 159,000

Company saves Rs 1,500 (marginal, but with planning can optimize further)

Note: This strategy requires careful planning and compliance with employment laws.

When to Choose Each Structure

Choose Self-Employed (Personal Tax) If:

✅ Annual profit consistently under Rs 1 million

✅ You withdraw most/all profits (lifestyle business)

✅ You want simplicity and lower compliance costs

✅ Business is low-risk (professional services, consulting)

✅ You don't need to raise outside investment

✅ You're comfortable with personal liability

Best for:

• Freelancers and consultants
• Solo professional practices (doctors, lawyers, accountants)
• Small service businesses
• Side hustles and part-time businesses
• Content creators

Choose Company (Corporate Tax) If:

✅ Annual profit consistently exceeds Rs 2 million

✅ You want to reinvest most profits for growth

✅ Business has significant liability risks

✅ You plan to seek investors or sell business eventually

✅ Multiple partners/shareholders involved

✅ Benefit from corporate credibility for large contracts

✅ You want to optimize through salary + dividend strategy

Best for:

• Scalable businesses (tech startups, SaaS)
• Manufacturing and construction
• Businesses with employees (10+)
• Property development
• High-risk industries
• Businesses seeking investment

The "Hybrid" Approach

Start as self-employed, incorporate later:

Many successful businesses:

1. Start as sole trader (low compliance, low tax)
2. Grow to Rs 500k-1M revenue
3. Incorporate when profit consistently exceeds Rs 1M
4. Benefit from both: simplicity first, then structure for growth

Conversion process:

• Incorporate new company
• Transfer business assets and customers
• Close individual BRN
• Cost: Rs 25,000 - Rs 75,000 (legal/accounting fees)

Other Tax Considerations

Dividend Tax

Mauritius residents:

• No separate dividend tax for Mauritius-resident shareholders
• Dividends added to total income, taxed at progressive rates
• First Rs 650,000: Effective 0% on dividends
• Above Rs 650,000: Marginal rates apply

Example:

• You receive Rs 400,000 dividend (only income)
• Personal tax: Rs 0 (below Rs 650k threshold)
• Dividend effectively tax-free

Non-residents:

• 15% withholding tax on dividends paid to non-residents

Capital Gains Tax

Good news: Mauritius has NO capital gains tax on:

• Sale of business
• Sale of property (with some exceptions)
• Sale of shares
• Investment gains

This favors companies:

• Sell company shares: No capital gains tax
• Sell sole trader business: More complex, may be treated as income

VAT (Value Added Tax)

Same for both structures:

• Turnover > Rs 6 million: Must register for VAT
• 15% standard rate
• No difference between company and individual

Social Contributions

Self-Employed:

• No mandatory NPS (National Pension Scheme) contributions
• Can voluntarily contribute to NSF (National Savings Fund)

Company Employing Directors:

• If director is salaried employee:
  • Employer NPS: 6% of salary
  • Employee NPS: 3% of salary
  • Additional cost to consider

Example:

• Director salary: Rs 30,000/month
• Employer NPS: Rs 1,800/month (Rs 21,600/year)
• Employee NPS: Rs 900/month (deducted from salary)

Audit Requirements

Self-Employed:

• No audit required (unless turnover > Rs 10 million)
• Saves Rs 15,000 - Rs 50,000 annually

Company:

• Audit required if turnover > Rs 10 million
• Small companies (under Rs 10M turnover): No audit needed
• If audit needed: Cost Rs 15,000 - Rs 75,000/year

Total Cost Comparison

Annual Costs Beyond Tax

Self-Employed:

Cost Item	Amount
BRN renewal	Rs 125 - Rs 500
Accounting/bookkeeping	Rs 10,000 - Rs 30,000
Tax return preparation	Rs 3,000 - Rs 8,000
Total annual cost	Rs 13,000 - Rs 38,000

Company (Ltd):

Cost Item	Amount
Company secretary	Rs 5,000 - Rs 15,000
Registered office	Rs 3,000 - Rs 10,000
Accounting/bookkeeping	Rs 20,000 - Rs 60,000
Tax return + annual return	Rs 10,000 - Rs 25,000
Audit (if required)	Rs 15,000 - Rs 50,000
Total annual cost	Rs 38,000 - Rs 160,000

Additional company cost: Rs 25,000 - Rs 122,000 per year

Break-Even Analysis

At what profit level does company make sense despite higher compliance costs?

Rough calculation:

Profit Level	Personal Tax + Costs	Corporate Tax + Costs	Better Option
Rs 500,000	Rs 11k + Rs 25k = Rs 36k	Rs 75k + Rs 50k = Rs 125k	Personal (-Rs 89k)
Rs 1,000,000	Rs 73.5k + Rs 25k = Rs 98.5k	Rs 150k + Rs 50k = Rs 200k	Personal (-Rs 101.5k)
Rs 2,000,000	Rs 223.5k + Rs 25k = Rs 248.5k	Rs 300k + Rs 50k = Rs 350k	Personal (-Rs 101.5k)
Rs 5,000,000	Rs 673.5k + Rs 25k = Rs 698.5k	Rs 750k + Rs 100k = Rs 850k	Personal (-Rs 151.5k)

Conclusion: Even at Rs 5M profit, personal tax structure is cheaper from pure tax perspective.

But: Companies offer non-tax benefits (liability protection, easier to sell, investor appeal) that may justify higher tax cost.

Real-World Decision Factors

Beyond Tax: Why People Incorporate Despite Higher Tax

1. Limited Liability Protection

• Protects personal assets if business fails or faces lawsuits
• Critical for high-risk industries (construction, manufacturing)
• Peace of mind worth the extra tax

2. Easier to Raise Investment

• Angel investors and VCs only invest in companies
• Can sell shares for funding
• Equity financing not possible as sole trader

3. Business Valuation and Sale

• Companies easier to value and sell
• Sell shares vs selling assets individually
• Better exit strategy

4. Multiple Owners

• Shareholders system clearer than partnership
• Better for family businesses
• Clear succession planning

5. Professional Credibility

• "Limited" suffix conveys stability
• Required for some government/large corporate contracts
• Clients may prefer corporate entities

6. Employee Equity

• Can offer shares to key employees
• Attract and retain talent
• Equity incentive schemes

Personal Tax Advantages

1. Simplicity

• Less paperwork
• Lower compliance burden
• More time for actual business

2. Lower Costs

• Rs 25,000 - Rs 100,000+ saved annually in compliance
• No company secretary or registered office fees
• Simpler accounting

3. Direct Profit Access

• No dividend procedures
• Take money out freely
• No corporate formalities

4. Tax Savings

• Rs 50,000 - Rs 150,000+ saved in tax annually (depending on profit)
• Keeps more money for you

Frequently Asked Questions

Q: Can I change from sole trader to company later?
A: Yes, you can incorporate anytime. Process takes 2-4 weeks, costs Rs 25,000-75,000 including professional fees.

Q: If I incorporate, can I ever go back to sole trader?
A: Technically yes (close company, start as individual), but rare and complex. Better to choose carefully initially.

Q: What if I have some years with high profit, some low?
A: Self-employed is better for variable income (progressive rates adapt). Company at flat 15% always.

Q: Can a company owner pay themselves below market salary to save tax?
A: MRA may challenge artificially low salaries. Salary should be reasonable for role and industry.

Q: Do I pay tax on retained company profits if I don't take dividends?
A: Company pays 15% corporate tax. You only pay personal tax when you actually receive dividends.

Q: Which structure is better for tax if I plan to sell the business?
A: Company - selling shares has no capital gains tax. Selling sole trader business may be treated as taxable income.

Decision Framework

Quick Decision Tree

Start here: What's your primary goal?

Goal: Minimize tax (all else equal)
→ Self-employed (almost always lower tax)

Goal: Protect personal assets from business risks
→ Company (limited liability worth the extra tax)

Goal: Seek investor funding
→ Company (investors require it)

Goal: Build to sell business
→ Company (easier exit, no capital gains tax on share sale)

Goal: Keep things simple
→ Self-employed (much simpler compliance)

Profit < Rs 1 million + simple service business + low risk
→ Self-employed

Profit > Rs 2 million + high risk + plan to reinvest for growth
→ Company (despite higher tax, benefits justify it)

Conclusion

From a pure tax perspective, self-employed (personal tax) is cheaper in Mauritius for almost all profit levels.

Tax savings as self-employed:

• Rs 500k profit: Save Rs 64,000
• Rs 1M profit: Save Rs 76,500
• Rs 2M profit: Save Rs 76,500

However, incorporate (corporate tax) if:

• Need limited liability protection
• Seeking investors
• Multiple shareholders
• Building to sell
• Very high profits (Rs 5M+) with significant retention

Best approach for many:

1. Start as self-employed (lower tax, lower costs, simpler)
2. Grow to Rs 750k - Rs 1M revenue
3. Incorporate when:
   • Profit consistently >Rs 1M AND
   • One of the non-tax benefits applies (liability, investors, sale plans)

Don't incorporate just for tax - you'll pay more. Incorporate for business structure, liability, or growth strategy reasons.

Consult an accountant if your situation is complex or if profit exceeds Rs 1 million annually. Professional tax planning can optimize your structure.

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