Global Payment and Compliance
Mauritius has a mixed developing economy based on financial services, agriculture, tourism, and manufactured exports. It has among the highest GDPs in Africa.
Mauritius is an island country in the Indian Ocean off the eastern coast of Africa. It has a population of approximately 1.263 people; a significant percentage is between the ages of 15 to 59. Unlike most African countries, Mauritius has a mixed developing economy based on financial services, agriculture, tourism, and manufactured exports. Notably, it’s among the highest GDPs in Africa.
Doing business in Mauritius is also easy. However, hiring and paying remote employees and independent contractors in Mauritius requires employers to understand local employment laws and tax requirements. Therefore, this article is a guide for an employer who wants to build a remote team in Mauritius.
Despite the close similarities, there is a difference between a freelancer and an independent contractor.
Often, freelancers are hired to handle projects on a short-term basis, and their level of commitment to a company is minimal compared to an employee. More importantly, they’re flexible; thus, they may work with multiple clients simultaneously. Also, they’re responsible for filing their taxes.
On the other hand, Independent contractors are often hired to work on long-term projects. However, they don’t receive and are not entitled to certain benefits such as a pension, employment insurance, and vacation pay like employees. Independent contractors also have to pay taxes from their accounts because employers don’t withhold any tax from their paychecks.
Note: Employers must classify members of their remote team appropriately to avoid risks related to misclassification. Generally, let there be well-defined policies and notable differences in how you treat contractors, freelancers, and full-time workers.
The process of hiring remote employees and independent contractors varies from country to country due to the complexity of laws. Above all, potential employers have to remain compliant all along. Below are ideal ways to go about it:
The first method of hiring workers, specifically remote employees in Mauritius as foreign employers, is by setting up a local entity or subsidiary of the company in Mauritius. It means establishing an employer presence with a local office, opening an account with a local bank, setting up local payroll, and getting an address. It also entails registering with the relevant agencies and acquiring necessary certifications and licenses.
However, the path of having a local entity may not be the most ideal for international employers for three reasons. First, setting up a subsidiary is time-consuming. It may take months to get all requirements and set up an office. Second, it’s a complex process. Lastly, setting up a subsidiary that the business may not need in the long term is expensive.
Employers have an alternative of engaging and hiring independent contractors directly. It’s a suitable option if they don’t intend a remote worker from Mauritius to handle a one-time project and don’t intend to keep them as full-time employees.
However, employers must first agree to the terms of the contract with the independent contractor and also comply with local Mauritian laws. Usually, this process involves two parties, i.e., the employer and the independent contractor.
The downside of this method is that there is a risk of misclassification for employees, especially foreign employers who don’t understand local contractor laws.
Using an EOR service provider is an alternative to the two approaches of hiring remote employees and independent contractors. EOR services are ideal for employers who don’t want to go through the hassle of setting up a subsidiary to hire remotely in Mauritius. EOR provider also hires independent contractors on behalf of foreign employers. Additionally, an EOR service provider handles all compliance and regulatory requirements, including the tax, on behalf of employers.
One of the most significant benefits of using EOR service is saving time, accessing a talent pool, and not dealing with complex legal requirements.
For example, Workpay is an EOR provider that helps employers hire remote employees and independent contractors without the need to set up a local entity in Mauritius. More importantly, employers remain compliant throughout the process.
Payroll and tax laws in Mauritius differ from other African countries. Therefore, employers need to understand this aspect before processing payroll. Let's briefly explore what it entails.
First, employees in Mauritius expect to be paid their salary monthly or weekly. The minimum wage is approximately 2,250 Mauritian rupees ($54.35) per week which translates to 9,000 MUR ($217.40) per month.
Secondly, employers are expected to contribute specific percentages of the employee salary as outlined below:
Employee salary is also taxable, and are expected to make specific contributions as follows:
It’s also worth noting that individual income tax ranges from 5% to 15%. For income above MUR 650,000, the tax will be at 15%, while income below the exact figure is at 10%.
Another critical aspect an employer needs to consider when processing payroll is how they will transfer payments to remote employees and independent contractors in Mauritius. Check out the list below:
Transferring funds directly from an employer’s account to an employee’s account is one of the preferred payment methods. To wire the money, employers need their employee’s details, such as their full name, bank account number, and respective routing and transfer numbers.
Direct deposits offer convenience, i.e. funds are transferred instantly from the employer’s account to the employee’s account. Besides, the transaction leaves a clear record that employers can easily access in the future.
However, direct deposits require employees to have a bank account; setting up new employees can take a long.
The banks supporting international money transfers in Mauritius include HSBC, MCB bank, BCP bank, ABSA bank, Bank One, and the Mauritius Commercial Bank.
Another option for paying remote employees and independent contractors in Mauritius is via online money transfer services. They entail apps and websites allowing users to access and send funds from their bank accounts or e-wallets to other users.
Often, this payment option is fast and allows employers to send payments directly to their employees.
Among the best platforms for employers to send payments to remote employees in Mauritius include Payoneer, Xoom, TransferGo, Currencyfair, WISE, Worldremit, Remitly, and XE transfer money.
Cash Pickup is another method that international employers can use to pay remote employees and independent contractors in Mauritius. All employers need is employee’s information, and they can pay with a credit or debit card as they wait for the cash pickup number. Once employers have the pick up number, they relay it to the recipient. Often cash will be available for pickup in minutes in the nearest pickup location within Mauritius.
The top service providers for cash pickups in Mauritius are MoneyGram, Ria Money Transfer, and Western Union.
The above-listed service providers also allow users to send money online and internationally through their apps or websites. It’s also fast, simple, and secure.
EOR service is an alternative method for employers who don’t understand payroll and tax requirements in Mauritius and don’t want to deal with the hassles or complexities associated with it.
An EOR handles payroll processing on behalf of an employer, including processing a local-compliant payroll in Mauritius. An EOR also ensures tax remittance is done on time and appropriately. As a result, employers don’t need to set up a local entity to hire and pay remote employees or independent contractors.
Are you looking to build a remote team in Mauritius yet don’t know how you’ll pay them legally and compliantly? Worry no more because Workpay is Africa’s best EOR that will act as the total admin employer and provide a seamless remote payroll.
Employers need not worry about the complex laws and tax requirements. Workpay handles everything; including legal contracts, disbursement of salaries, and taxes. More importantly, employers get to work with a competent legal team that understands employment requirements and laws of African countries.
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