MAURITIUS AS A GATEWAY FOR AFRICAGARY GOWREA

What people have to say about Africa?

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…”

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Changing Africa

- 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

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Why Africa?

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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 infrastructur

e

GDP Growth rate and FDI in Africa

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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 3rd, ahead of Russia and Brazil in terms of the number of FDI Projects

Investments in Africa in recent years

- 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.

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What people have to say about Mauritius?

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.”

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Mauritius – Africa: Rationale Ranked 1st in Africa the World Bank Ease of Doing Business Survey

2012 (23rd 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 discussion

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

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Mauritius: Income Tax Provisions

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

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Mauritius: Commonly used vehiclesCategory 1 Global Business Domestic Companies FreeportSubject to tax at a rate of 15% 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 Underlying tax 100% Foreign Ownership allowed

Tax sparing Tax sparing Reduced Port- Handling Charges

Duty free and VAT free imports on goods and equipmentDuty free market access for SADC/ COMESA if rules of origin and value addition criteria met

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Regional Headquarter

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Foreign Company

RHQ Mauritius

Africa Africa Africa

-Foreign tax Credit

-Underlying Tax

-Mixholding Tax(Mixer Company)

Treasury function

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Foreign Company

Mauritius Bank

Africa

Pledge Assets

Loan

Advantage:- Arm length-Profit extraction

Procurement Centre

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Suppliers

Mauritius

Africa

Free Port Company

Advantages:Can make use of freeport/ reduced port handling charges

PAY N GO

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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%

Captive Insurance

Tax in Mauritius: 3% if holder of a GBL 1 Licence

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Ownership Group

Operating Business Captive ReinsuranceCoverag

eInsuranc

e Premium

s

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THANK YOU

Mauritius: DTAA Network

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Belgium CroatiaCyprus FranceGermany SwedenItaly UKLuxembourg

BangladeshChina IndiaMalaysia NepalPakistan Sri-LankaSingapore Thailand

Botswana LesothoMozambique MadagascarNamibia RwandaSeychelles South AfricaSenegal SwazilandTunisia UgandaZimbabwe

Kuwait UAEQatar Oman

Barbados

Mauritius – Africa: DTAAs

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Target Countries

Dividends Interest Royalties 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

Botswana 15 5/10 15 12 15 12.5 Lesotho 25 10 N/A 10 N/A 10 Madagascar 20 5/10 N/A 10 N/A 5 Mozambique 20 8/10/15 20 8 20 5 Namibia 10 5/10 0 10 10.5 5 Rwanda 20 0 N/A 0 N/A 0 Senegal 10 0 6/8/16/20 0 20 0 Seychelles 15 0 10/40 0 0/15 0 South Africa 0 5/15 0 0 12 0Swaziland 12.5/15 7.5 10 5 15 7.5 Tunisia 0 0 20 2.5 15 2.5Uganda 15 10 15 10 15 10 Zimbabwe 20 10/20 10 10 20 15