Tax crackdown in Mauritius hits Standard Bank, Absa, and Investec

A raft of new corporate taxes that could erode banks’ profitability is testing Mauritius’s long-standing status as a low-tax gateway for cross-border capital, according to Moody’s Ratings.

Lenders across the Indian Ocean financial hub — including local firms and units of Standard Chartered, Standard Bank, Absa, and Investec — are grappling with a tightening fiscal regime designed to plug domestic budget pressures. 

Authorities overhauled taxes in June 2025 and expanded the measures this year to shore up public finances in the face of rising national debt and increasing social spending. 

Persistent budget deficits — worsened by external pressures, weak growth and delayed foreign funding — have inflated the country’s debt to an estimated 88% of the country’s gross domestic product from 64% five years ago. 

The changes have lifted the effective tax rate for foreign-owned banks to as much as 22% from 4.7% previously, and to 32% from 18% for key domestic banks, according to industry estimates.

“We’ve seen both higher taxes, but also lower distributions to the population overall, which has impacted both the corporate sector and households,” Christos Theofilou, vice president at Moody’s Ratings, said in an interview. 

The new charges include a 2% corporate climate responsibility levy and a 2.5% tax on chargeable income from domestic operations.

The government has also introduced a fair-share contribution on profits and added a 15% minimum tax for multinational groups to retain revenues from global enterprises within the Indian Ocean island economy.

The fair-share contribution will help prevent a downgrade for the country’s investment-grade sovereign rating, Premier and Finance Minister Navinchandra Ramgoolam said in his 2025-26 budget speech. 

Financial services are a central pillar of the Mauritian economy, contributing as much as 14% of overall output for the country, positioning itself as the leading international financial centre for Africa, the Middle East and Asia. 

“The impact of higher taxes on competitiveness is obviously something that there are concerns around, but on the other hand, the authorities are trying to make the jurisdiction more attractive in terms of non-tax incentives and measures,” Theofilou said.

Banks are already adapting their businesses to protect margins by ramping up lending and scaling digitisation efforts to boost efficiency. 

Robust capital reserves will also protect profits. Core capital stood at 18.4% by June 2025, nearly triple the minimum regulatory requirement of 6.5%.

“We expect profitability to remain solid, but to be lower because of the higher taxes,” Theofilou said.