Mauritius Budget 2025–2026: Key changes, tax reforms, and impact on foreign investors

Mauritius has undergone a significant budgetary shift in just one year. While the 2024–2025 budget focused on economic recovery and attracting talent, the 2025–2026 budget takes a more cautious approach, centered on financial consolidation. Magellan, a firm specializing in expatriation advice, examines the key differences between these two fiscal years, their respective objectives, and what they mean for individuals and foreign investors.

A profoundly changed economic context

The 2024–2025 budget was crafted with a strong focus on economic recovery. The former government placed its bets on growth—estimated at 4.7%—driven by a rebound in tourism, a boost in the construction sector, and the continued expansion of financial services. This approach emphasized tax incentives, increased public spending, and a clear push to enhance the country’s appeal.

By 2025, however, the newly elected government is contending with a much more challenging economic climate. Public debt has climbed above 90% of GDP, and the budget deficit has reached 9.8%—its highest level since the COVID-19 pandemic. Faced with this stark imbalance, the government has made a decisive shift in its fiscal strategy.

Budget comparison: Revenue, spending, and deficit

	2024–2025 Budget	2025–2026 Budget
Revenue	Rs 182.2 billion	Rs 224 billion
Expenditure	Rs 252.2 billion	Rs 261.4 billion
Deficit	≈ Rs 70 billion (9.8%)	≈ Rs 37.4 billion (4.9%)
Public Debt	≈ 90% of GDP	Target: 75% (medium term)

Two opposing budget philosophies

2024–2025: Stimulation and attractiveness

The previous budget focused on stimulating the economy and boosting the country’s appeal. Key measures included:

• Substantial support for families and retirees, including pensions and a Guaranteed Minimum Income of Rs 20,000;
• Incentives for real estate investment through Smart Cities and PDS schemes;
• Tax exemptions for expatriates, retirees, and investors;
• Support for digital transition via equipment subsidies.

The goal was to maintain post-COVID economic momentum and position Mauritius as an open, competitive, and digitally connected nation.

2025–2026: Consolidation and structural reform

In contrast, the current budget emphasizes financial discipline and long-term structural change. It introduces:

• A gradual reduction of the public deficit;
• Tax reform through a 15% “Fair Share” contribution on income above Rs 12 million;
• Tighter tax rules for foreign real estate investments;
• Expansion of digital VAT, effective January 2026;
• Removal of certain tax benefits previously granted to Smart Cities;
• A shift toward greener taxation aligned with ESG (Environmental, Social, and Governance) goals.

This new direction seeks to restore the state’s financial health while maintaining focused social support where it’s most needed.

Stricter conditions for real estate investment and residence permits

One of the most significant shifts in the 2025–2026 budget concerns the real estate sector:

• Registration fees for foreign buyers have doubled, rising from 5% to 10%;
• A new 10% tax on property resales has been introduced, or 30% of the profit, whichever is higher;
• VAT reimbursements will be discontinued as of 30 June 2025;
• Newly approved Smart Cities will no longer benefit from tax incentives after 5 June 2025.

Changes have also been made to residence permits. While two new categories of Occupation Permits have been introduced, the income requirements—particularly for salaried applicants—have been raised.

A contributory approach to taxation

The 2025–2026 budget ushers in a more contributory tax model, with several notable changes:

• Introduction of a 15% “Fair Share” contribution on high-income earners;
• Expansion of digital VAT;
• Higher excise duties on tobacco, alcohol, and sugary products;
• Revised vehicle-related taxes, including registration fees, license costs, and pollution levies.

These measures translate into the end of a decade-long era of tax relief. The government’s aim is to increase accountability among economic players while working toward restoring fiscal stability.

Social protection: Maintaining a safety net

Despite the shift toward fiscal consolidation, the government has retained several targeted support measures:

• VAT exemptions now apply to a broader list of basic necessities;
• Free SC and HSC exam registration remains available for eligible students;
• Financial support continues for electricity bills in low-income households.

At the same time, the retirement age will gradually increase to 65—a measure intended to help manage the rising costs of an aging population.

Retirement at 65: What are the economic and social implications for Mauritius?

Raising the retirement age to 65 could help stabilize public finances in the medium term by easing pressure on the pension system and lengthening contribution periods. As of 2024, universal pension funding already made up more than 30% of total social spending. Extending working life may help slow this trend, particularly as Mauritius moves toward implementing a National Pension Scheme (NPS)—a sign of deeper reforms to come.

However, the social implications are considerable. The labor market will need to adjust to an aging workforce, with increased demand for healthcare services, lifelong learning opportunities, and age-appropriate employment. Keeping older workers in the job market may also limit opportunities for younger graduates, who already face unemployment rates above the national average.

Small businesses, especially those in labor-intensive sectors like construction, fishing, and agriculture, may be hit hardest. These industries often involve physically demanding work, and raising the retirement age could deepen existing inequalities between white-collar and blue-collar workers. Gradual retirement options or retraining programs might help ease the transition, but these solutions require additional government funding.

In this context, the government must strike a careful balance—reconciling fiscal responsibility with social equity—to ensure this reform does not become a source of intergenerational tension.

A consistent focus on digital and innovation:

On the technology front, the 2025–2026 budget remains firmly ambitious:

• Rs 25 million allocated to launch an AI plan supporting start-ups;
• Establishment of a National Research & Innovation Institute;
• Integration of AI into higher education curricula;
• Tax deductions for SMEs that invest in innovative technologies.

These initiatives reflect a long-term vision to position Mauritius as a leading digital and tech hub in the region.

Summing up: A shift or a strategic adjustment?

Area	2024–2025	2025–2026
Budgetary policy	Expansionary	Restrictive with rebalancing
Real estate	Incentive-driven	Reinforced taxation
Expat taxation	Lightened	Fair Share + digital VAT
Social spending	Universal	Targeted and conditional
Innovation/Digital	Partially supported	Strengthened and structured

Our Conclusion

The shift from the 2024–2025 budget to that of 2025–2026 marks more than a change in political direction—it reshapes the landscape for investors and economic players in Mauritius. This new course, more disciplined and demanding, requires careful analysis and deliberate strategic planning.

In this evolving context, Magellan is not just an observer but a proactive partner. With deep expertise in fiscal policy, administrative reform, and emerging ESG standards, Magellan helps investors navigate change, secure their ventures, and drive the sustainable growth of their assets.

When every decision carries weight, partnering with experts is essential. Rely on Magellan’s insight to transform the challenges of the 2025–2026 budget into new opportunities for growth.

Sources:

Budget 2025-2026 : Ce qu’il faut retenir – defimedia.info

National Budget 2025/2026 – MCCI – mcci.org