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Tony Blair once described Africa as : “ There is no doubt: Africa is changing for the better, the perceptions of Africa are Changing for the better. There.

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Presentation on theme: "Tony Blair once described Africa as : “ There is no doubt: Africa is changing for the better, the perceptions of Africa are Changing for the better. There."— Presentation transcript:


2 Tony Blair once described Africa as : “ There is no doubt: Africa is changing for the better, the perceptions of Africa are Changing for the better. There is a new sense of hope and confidence, an optimism and An expectation that is based on evidence not dreams…” 1

3 - Growing domestic demand in Africa and Rise of middle class acted as a shock absorber - Improved macroeconomic management from a generation of managers who trained during the restructuring programmes of the 90s. - Diversified Economies 2

4 3 52 African cities with more than 1 Billion people - emerging middle class & 1.2 billion people of working age by 2020 Deepening of Financial Markets: Expanding banking sector Ease of doing business has improved - Better business regulations Improved macro economic indicators and untapped resources Diversified economy - commodity, financials, communication & technology, consumer goods and retail IMF: Africa will hosts seven of the fastest growing economies in 5 years Private consumption to reach USD 1.8 trillion in 2020 Spending power of Africa to increase by 25% in the next decade Need for infrastructure

5 4 GDP Growth Rates (%) for Sub Saharan African Economies according to The Economist, 2012: Expected Capital forecast to reach USD 150 Billion by 2015 Overall Africa is 3 rd, ahead of Russia and Brazil in terms of the number of FDI Projects

6 - Takeover of Zain Telecom’s Africa Operation by Indian Telecom major Airtel for USD 10.7 billion (making Airtel have presence in 15 African Countries). - Coca-cola looking to add 1300 to 2000 new distribution businesses creating between 5300 to 8400 new jobs and generating about USD 520 million in new revenue for local economies. - Godrej acquiring Nigerian personal care product maker Tura last year for about USD 33 million and is planning to acquire 51% stake. - Walmart’s deal to buy South African retail chain Massmart for USD 4 billion. - Chinese investments in Africa are expected to cross USD 50 billion and Sino-African trade is expected to reach USD 300 million within 2015. 5

7 Hillary Clinton, US State Secretary, 11 August 2009: “Mauritius may be a small country, but it has the potential to make a big impact, both by contributing to Africa’s overall prosperity and by showing the way, providing an example of how other nations can stimulate growth by setting clear and fair rules for the benefit of those who wish to do business in Mauritius.” 6

8  Ranked 1 st in Africa the World Bank Ease of Doing Business Survey 2012 (23 rd in the World) and ranked first in the Mo Ibrahim Survey on corporate governance  Member of regional blocs, such as SADC, COMESA and IOR-ARC  White List of OECD  Modern legislative framework with ultimate court of appeal is by judicial review by the Law Lords of the Privy Council of the UK  No foreign exchange restrictions – allowing free repatriation of funds  Ratified 36 DTAAs (13 DTAAs with African countries) – DTAA with Republic of Congo and Kenya awaiting ratification and DTAAs with Zambia, Nigeria, Egypt and Malawi awaiting signature, with Algeria, Burkina Faso, Yemen, Ghana and Saudi Arabia under discussion36 DTAAs 13 DTAAs with African countries  Ratified IPPAs with several of the Africa treaty partners  Member of MIGA, a World Bank Agency  Mauritius is also positioning itself as the arbitration centre in Africa  The Stock Exchange of Mauritius has been designated as a Recognized Stock Exchange by the UK 7

9  Income Tax Rate for corporations - of 15%  Credit for foreign taxes suffered available; credit can be claimed in the form of WHT, underlying taxes or tax sparing  Qualified Corporations – where evidence of foreign taxes suffered are not available, they are eligible to an 80% deemed tax credit; resulting in a maximum effective rate of 3%. A qualified corporation is defined as a corporation holding a GBL 1 License under the Financial Services Act 2007  No WHT on outbound payments by Global Business Companies  No Capital Gains Tax on disposal of shares in Mauritius  No Thin Capitalization rules/legislation  No Transfer Pricing rules/legislation 8

10 Category 1 Global BusinessDomestic CompaniesFreeport Subject to tax at a rate of 15% Indefinite exemption on the profits Can claim credit for foreign tax suffered(FTS). Where no evidence of FTS, entitled to 80% deemed tax credit; effective tax rate-3% Can claim credit for foreign tax suffered Eligible to claim benefits under the expanding Mauritius Treaty Network Eligible to claim benefit under the expanding Mauritius Treaty Underlying tax 100% Foreign Ownership allowed Tax sparing Reduced Port- Handling Charges Duty free and VAT free imports on goods and equipment Duty free market access for SADC/ COMESA if rules of origin and value addition criteria met 9

11 10 Foreign Company RHQ Mauritius Africa -Foreign tax Credit -Underlying Tax -Mixholding Tax (Mixer Company)

12 11 Foreign Company Mauritius Bank Africa Pledge Assets Loan Advantage: -Arm length -Profit extraction

13 12 Suppliers Mauritius Africa Free Port Company Advantages: Can make use of freeport/ reduced port handling charges

14 13 African Company Mauritius Supplier-Africa Client Places Order- transfers money to Mauritius to make payment Makes payment on behalf of client Tax in Mauritius : Taxation at 15% Foreign tax credit – 80%

15  Tax in Mauritius:  3% if holder of a GBL 1 Licence 14 Ownership Group Operating BusinessCaptive Reinsurance Coverage Insurance Premiums


17 16 BelgiumCroatia CyprusFrance GermanySweden ItalyUK Luxembourg Bangladesh ChinaIndia MalaysiaNepal PakistanSri-Lanka SingaporeThailand Botswana Lesotho Mozambique Madagascar Namibia Rwanda Seychelles South Africa Senegal Swaziland Tunisia Uganda Zimbabwe KuwaitUAE QatarOman Barbados

18 17 Target Countries DividendsInterestRoyalties Withholding tax rates in target country on dividends paid Withholding tax rates in target country on interest paid Withholding tax rates in target country on royalties paid Non-Treaty Rates Treaty with Mauritius Non-Treaty Rates Treaty with Mauritius Non-Treaty Rates Treaty with Mauritius Botswana155/1015121512.5 Lesotho2510N/A10N/A10 Madagascar205/10N/A10N/A5 Mozambique208/10/15208 5 Namibia105/1001010.55 Rwanda200N/A0 0 Senegal1006/8/16/200200 Seychelles15010/4000/150 South Africa05/1500120 Swaziland12.5/157.5105157.5 Tunisia00202.5152.5 Uganda151015101510 Zimbabwe2010/2010 2015

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