South Africa and Rwanda were precursors. Since then, the countries of the Continent have followed suit
in the renegotiation of the tax agreements established from the 1990s with Mauritius. But in
upstream, the process, not always easy, must often (even always) be marked by insistence and firmness from the
from the states. Decryption.
“I naturally think that Mauritians don't like what is happening. But in a
very diplomatic approach, we put solid arguments on the table. We tell them that in view of
the evolution of international taxation, even for them, this type of agreement has become embarrassing", confides to La
Tribune Afrique a source within the Senegalese tax administration who requests anonymity. " It was a
political agreement » Senegal is indeed one of the few countries to reveal a quantified estimate of the shortfall in
gain caused by the double taxation avoidance agreement which binds him since April 17, 2002 to île
Mauritius. The Dakar authorities spoke last year of more than 257 million dollars in revenue
missed taxes over 17 years. Magueye Boye, tax inspector and chief negotiator of the treaty on the
Senegal has practically called this convention "the most unequal treaty for Senegal among all treaties"
signed by his country. According to our source, it all started with a movement of Mauritians to Senegal
around 2001. Their proposal: investments “of several hundreds of billions of CFA francs”. " The
Mauritians had imposed a single condition, namely the signing of a tax treaty between the two
country. President Wade [Head of State at the time, editor's note] had taken a delegation without including
technicians and told them that they had to sign quickly. And as the order came from above, the convention was
signed", explains this Senegalese official. And to add: “So it was a political agreement”. In June
last, the government denounces this treaty, in accordance with the clauses. “We had contacted the Mauritians
by mail three times without return. This is the reason why we have denounced", explains our
source. La Tribune Afrique consulted a copy of the said agreement. One thing calls out. Article 29 states
clearly that the agreement could not be terminated before “the five years following its entry into force”. And the
other available bilateral agreements all contain this clause. Did the Mauritians design the agreements
in this way to guarantee a tax windfall over at least five years? Since then, renegotiations
are continuing and Senegal thinks it can "soon" conclude this chapter. But this West African state has only
than following in the footsteps of several other countries on the Continent which have ended up opening their eyes to the conventions
signed with Maurice. South Africa and Rwanda were precursors. A “a bit difficult” renegotiation
to tell the truth » It was in May 2015 that the new tax agreement between Mauritius and South Africa entered
into force, following the renegotiation in 2013 of the initial agreement of 1999. Rwanda is evolving with a
new tax agreement that binds it to Mauritius since April 20, 2013. But like the Dakar, Kigali had to go through
strength. “It was a bit difficult to tell the truth. We approached our colleagues from Mauritius by mail
as provided for in the agreement. We wrote to them a first time, a second time, a third time and
we were obliged, as stipulated by the agreement, to simply terminate the agreement. What drove the island
Mauritius to ask for renegotiation", explains Aimable Kayigi, Commissioner in charge of taxes
nationals to the Rwanda Revenue Authority. As in other countries, it took time for the government
Rwandan to realize the inequality of the clauses of the agreement. “It is only five years after the implementation
implementation of this agreement that we realized that there were quite a few problems to be solved on the side of Rwanda. I
I'm going to mention just one," explains the manager. "The agreement, he continues, stipulated that if a Rwandan or a
Mauritian lends a service in one of the two countries, it would not be taxed. Presented in this way, the agreement seemed to be
win-win, but it was not in reality, because Mauritius was more advanced in terms of service delivery. We Rwandans were therefore much more recipients of services than providers.
As a result, we were the biggest losers in terms of taxing rights on imported services. This is
the main reason that led us to renegotiate this agreement, from the first article to the last, in order to share the
taxation rights”. A bonus of 3 to 4 million dollars per year in Rwanda “We have also worked
on the existing discrepancies that benefited certain taxpayers, because following the study that we had carried out, we
discovered that some companies came from all over the world and preferred to register in Mauritius,
in order to provide services in Rwanda without paying taxes there. We have renegotiated all these aspects,”
explains this official who represented the director general of the Rwandan tax authority at the high mass
organized in Kampala from 19 to 22 November by the Forum on Tax Administration in Africa.
Rwandans have gone over everything with a fine-toothed comb: technical services (construction sites, etc.), services to
companies, dividends, royalties, ... Today, Rwanda's taxing rights in the convention are
increased from 0% to 10%, 12% or 15% depending on the case. Result: "a very big change" in terms of his
tax revenues which would be increased annually by 3 to 4 million dollars following the renegotiation.
International mobilization with a pan-African focus Since then, several countries on the continent have reconsidered their
tax treaty with Mauritius, driven by international mobilization. The OECD has been, for several
times, the megaphone. In its report “Tax treaties, unequal conventions” denouncing among other things
Mauritian tax practices, the international NGO based in Johannesburg, Action Aid, shows itself
categorically: "lower-income countries should not sign unfavorable tax treaties with
other governments that take away their fiscal power". Last July during an interview granted to the
Southern Times, Tax Justice Network Africa - a pan-African organization based in Nairobi - calls on "all our
African governments to review existing tax treaties, particularly those signed with
tax havens to ensure that they do not lead to the erosion of the tax base of these countries. It is necessary
that our governments consult widely and develop treaties that will fill the gaps
that are being manipulated by multinational corporations,” said Alvin Mosioma, Executive Director of TJNA,
welcoming Senegal's approach and emphasizing the "success" of the NGO in Kenya where its outcry has
pushed Nairobi to renegotiate with Mauritius. Kenya is indeed the last country to take part in the exercise.
In October 2019, a new tax treaty was signed with the island, to break with that of 2012. Here, the
process is intended to be revolutionary, because Mauritius is identified as the first direct private African investor,
with 1.08 billion shillings in 2017, according to the Kenya National Bureau of Statistics (KNBS). But the previous
deal would be responsible for about $3.13 billion in lost tax revenue over the two
years according to The Star. The island could still renegotiate despite being removed from the EU A gray list
Mauritius, financial services - the main source of tax windfall for the country - represent 70% of GDP.
The island has, since the early 1990s, multiplied tax treaties with today 14 countries of the Continent. Yes
renegotiation is not always easy, the Mauritians -whom we tried in vain to interview- prefer
that to the complete rupture of the agreements. By the way, this will be one of the main missions of Renganaden
Padayachy and Mahen Seeruttun, respectively new Ministers of Finance and Development
Economics, and Financial Services and Good Governance. Especially since according to the ICIJ consortium which,
last July, castigated the Mauritian tax policy in its "Mauritius Leaks" investigation, Egypt,
Uganda, Lesotho, Zimbabwe and Zambia have "all declared that these treaties with Mauritius were
paralyzing”. On October 10, the European Union (EU) removed Mauritius from its gray list of
jurisdictions considered to be tax havens, for having engaged in a dialogue to remedy its
shortcomings in terms of good tax governance. Interviewed by L'express some time after he took over
function, Mahen Seeruttun his strategy which consists in "remaking the image of the Mauritian jurisdiction" in
the international. However, the spotlight remains on Port-Louis. “I understand, when you are an island and
that we only have tourism and fishing, positioning ourselves as a financial center makes it possible to capture global wealth.
This is what almost all the islands have done. But this model corresponded to a certain era. Everything is one
matter of context. After the financial crisis of 2008, the G20 and certain States of the world considered it useful to
correct certain negative externalities. What led to this more marked and generalized look at the policies
taxes”, develops our Senegalese source. Towards a global minimum CIT rate of 12.5%? Last
Global Forum on Transparency and Exchange of Information for Tax Purposes held at the headquarters of
the OECD in Paris on November 26, the questions of tax evasion and optimization by companies
international relations, in particular through bilateral tax treaties, were at the heart of the debates. A
proposal by the French Minister of Finance, Bruno Le Maire, is currently the subject of serious consideration: a
global minimum tax rate of 12.5% on corporate profits.