The Fourth Schedule of the Insolvency Act is amended to amend priority in which preferential creditors have to be paid.
Under the Fourth Schedule of the Insolvency Act (the “IA”), unpaid wages and salaries, up to a maximum of Rs 50,000, must now be paid after the liquidator or Official Receiver has settled the cost of the liquidator under sub-paragraph (1) of paragraph of the Fourth Schedule.
Prior to the amendment, unpaid wages of up to Rs30,000 had to be paid to employees after payment in respect of, firstly, the cost of the liquidator and, secondly, to Government and its Agencies (the Mauritius Revenue Authority, the Registrar-General Local Authorities) had been made.
Furthermore, under the amended ranking of preferential claims, amounts due to the Mauritius Revenue Authority under the National Pensions Act and the National Savings Fund Act now constitute an item of payment relating to wages and salaries – such that this item is now also listed under the second item in the list of preferential payments – as opposed to being amounts due to Government and its Agencies previously.
Moreover, the new paragraph providing for payments to Government and its Agencies (now the third sub-paragraph) now provides for the list of items below as per the following amended order:
- income tax under the Income Tax Act;
- income tax withheld as per the Pay As You Earn provisions of the Income Tax Act;
- value added tax under the Value Added Tax Act;
- registration duty under the Registration Duty Act;
- duty payable under the Customs Act, Customs Tariff Act and the Excise Act;
- charges, dues or duties payable to the Mauritius Revenue Authority under any enactment other than the National Pensions Act or the National Savings Fund Act;
- charges or dues payable to a local authority under any enactment.
Of note is the change in ranking between value added tax and income tax, which used to rank first and third respectively prior to the amendment. Furthermore, the legislation has brought some clarity to the item of duty payable to the Mauritius Revenue Authority; the amended list now expressly provides that such duty shall also include duty under the Customs Tariff Act and the Excise Act, as opposed to solely the Customs Act previously.
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