After Panama, Luxembourg, it is the turn of the Republic of Mauritius to be pinned for its dubious tax practices. The "Mauritius Leaks", consisting of more than 200,000 documents from the law firm Conyers Dill & Pearman obtained by the International Consortium of Investigative Journalists (ICIJ), reveal the underpinnings of a huge tax optimization machine whose countries Africans are the first victims.
Some 2,000 kilometers from the African coast, in the middle of the Indian Ocean, the Republic of Mauritius has built, since the 1990s, a solid reputation with major international groups seeking to pay the least tax possible for their activities. Africa.
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Taxes mini, secret maxi
The emails, internal documents and videos retrieved by the ICIJ, published on Tuesday, July 23, show that large international banks like Goldman Sachs, Deutsche Bank, BNP Paribas, multinationals such as Wal-Mart, Whirlpool or Total, but also the European Investment Bank or the African Development Bank, have turned to Conyers Dill & Perman's lawyers to develop their activities locally.
The Island knows how to attract these rich customers. It offers a very advantageous tax system for companies that decide to take up residence there. "It has a statutory tax rate on companies of 15%, but according to our calculations, the minimum rate that companies can benefit is often 0%," says Maïmouna Diakité, senior researcher for French-speaking Africa in Tax Justice Network, contacted by France 24. It suffices to fulfill certain conditions concerning, for example, the size of the company (number of employees) or the sector of activity in order to be entitled to significant tax rebates.
Mauritian banking secrecy has nothing to envy to other opaque financial centers like Switzerland, Panama or the Cayman Islands. It is thus impossible for the tax authorities of a third country to know who are the true beneficiaries of the multitude of shell companies registered in the Republic of Mauritius. "This is one of the countries that hosts the most screen companies in the world," says Maïouna Diakité.
Double (non) taxation agreements
But its main attraction lies in the vast network of double taxation conventions signed with African countries. The Republic of Mauritius has concluded a fortnight that allow companies to touch the tax jackpot. These treaties are designed, originally, to prevent a person - physical or moral - from paying the same tax in his country of residence and in the one where he has his activity. But its purpose has been misled by tax experts and some tax havens to minimize the tax burden on multinationals.
Thus, these agreements allow companies domiciled in Mauritius to pay signatory African States a low rate on profits from activities carried out in these countries, then settle the rest of the tax slate - taxes on companies - to the Mauritian tax office ... which will not ask them anything, or almost. Then, thanks to "other tax treaties with Western countries, these profits are repatriated to the head offices and the shareholders by minimizing, again, the taxes to be paid", explains Johan Langerock, expert of the questions of taxation for the NGO Oxfam.
It is this system that is very costly for African countries that would often need these tax revenues to reduce their poverty rate or develop infrastructure. "Mauritius, just behind the United Arab Emirates, is the most aggressive country to get reduced rates on interest payments, dividends from African states through these treaties," says Maïouna Diakité.
Zimbabwe, Kenya, Swaziland, and even Rwanda have lost millions to tax-minded multinational corporations, even though it is difficult to estimate exactly how much these tax treaties are weighing on the finances of these countries. . "Senegal has estimated at 150 million CFA francs losses related to the agreement signed with the Republic of Mauritius," says the expert of Tax Justice Network.
"Vicious circle"
The system is also so well run that it has "become a real vicious circle," says Johan Langerock. It has been in place for a long time, is proven, and legal advice and law firms know it by heart, so that "even when a company or institution does not necessarily want to tax optimization, it is advised to go through Mauritius to do business in Africa because it is the easiest, "says this expert. In addition to being fiscally very welcoming, the Republic of Mauritius "offers a very stable political, economic and legislative framework, which makes it even more attractive," he summarizes.
But the Mauritian authorities and the multinationals are not the only ones to blame. After all, you have to be two to sign a double taxation convention. Signatory African countries have thus knowingly renounced valuable tax revenues. But it was because they hoped that these treaties would reassure companies and "would be good for growth and jobs by promoting direct investment in the country," explains Johan Langerock.
Problem: "No study has ever been able to establish that the increase in investment was enough to offset the loss of tax revenue," said Maïmouna Diakité. Some countries, such as Senegal or Kenya, denounced these conventions or renegotiated the terms. But most of them are still trapped in these treaties and are afraid to leave, fearing to scare the companies that have invested in their homes. However, "it is not at all clear that these conventions are really the decisive criterion for companies looking to invest, and other factors, such as the level of infrastructure play a role at least as important," concludes Maïouna Diakité . Infrastructure that could be developed with money from tax revenues ... that multinationals do not pay.