Contribution Sociale Généralisée (CSG Regulations)

What is CSG?

CSG is Contribution Sociale Généralisée as payable under the National Pension Act by every participant and every employer of a participant, as applicable.

Who is a participant?

Participants:

• persons who are employed on a full-time/ part-time basis
• persons who are employed on a fixed term/ indeterminate contract
• a share worker entitled to a share of profits in an enterprise
• private household employees
• a person performing atypical work
• an executive director of a company
• a self-employed person
• a public sector employee
• a non-citizen employee
• a person aged 65 and above

Who is excluded?

• a non-citizen employed by a foreign contractor engaged in the implementation of a project funded at least 50% by a foreign state
• a non-citizen employed by an export manufacturing enterprise who has resided in Mauritius for a continuous period of less than 2 years (including absences period of more than 9 weeks)
• an individual enrolled under a training scheme set up by the Government or under joint public-private initiative with a view to facilitating the placement of jobseekers in gainful employment (e.g Youth Employment Program)
• a non-executive director of a company
• where a private household employee earns< MUR3,000/month, only the employer shall contribute

What is the basis and the rate of CSG?

• Applicable on remuneration which is defined as “basic wage or salary” under the said Regulation
• Withheld at source on a monthly basis
• Some employers may remit CSG on a yearly basis

It is now confirmed by the Mauritius Revenue Authority (MRA) that CSG is applicable on basic salary. The rates are as follows:

It is important to note that there is no ceiling for the contribution, except for the self-employed where the contribution is fixed.

How and when to remit CSG?

• The CSG withheld for a month has to be remitted to the MRA electronically on or before the end of the following month
• Exceptionally, for the month of September 2020, the last date for submission of the return and payment of CSG to the MRA is 30 November 2020

Penalty and Interest for late payment of CSG

• Penalty of 10% of the CSG unpaid
• Interest of 1% of the month or part of the month it remains unpaid
• Assessing Penalty not exceeding 25% of underpaid CSG

Is CSG deductible in the calculation of chargeable income of an employee?

Under the ITA 1995, any expenditure wholly, exclusively and necessarily in the performance of an employment is deductible in the calculation of chargeable income.

Therefore, we are of the view that CSG is deductible in the calculation of personal income tax of an individual. However, this is yet to be confirmed by the MRA.

What is the treatment of CSG under the double tax avoidance treaties signed by Mauritius?

Although CSG does not fall into the definition of income tax under Mauritius tax law, it will fall into the definition of a tax on employment income for tax treaty purposes.

Therefore, where Mauritius is not granted the right to tax employment income under a treaty, CSG will not be applicable.

Where a foreign resident has suffered CSG in Mauritius, the CSG will be deductible as foreign tax credit in its home country.

Will public sector employees contribute to CSG?

Although they are defined as a participant, the public officers and public sector employees will not contribute directly to CSG from their own renumeration. On the contrary, it is their employer, that is the government or the parastatal body which will contribute for their share in addition to the employer’s contribution.

It appears that such contributions will be funded from the taxpayer’s money. From a tax perspective, it may be argued that such benefit received by the employee qualifies as a taxable fringe benefit, i.e. it is expected that a public sector employee declares such benefit in their tax return.

Why do self-employed contribute a fixed amount of MUR 150 to the CSG?

Self-employed will contribute a fixed amount of MUR 150 irrespective of their income. Note self-employed includes an individual who works on his own account a professional such as an accountant, an architect, an attorney, a solicitor, a barrister, an engineer, a land surveyor, a legal consultant, a medical service provider, a project manager, a property valuer, a quantity surveyor, a tax adviser or any other individual carrying out similar type of activity.

It seems that the contribution of MUR 150 payable by self-employed individual matches the amount contributed by an employee receiving the minimum wage of MUR 10,200.