Treaty-shopping is about to get more expensive

Treasure island

MBIZA, A BUSINESS that grows berries in Zambia and South Africa, and Niel Finance and Services, which owns the Central African Republic’s largest mobile firm, would seem to have little in common. But both have headquarters in Mauritius, an island of 1.2m people 2,000km off the mainland. The country, which tops the World Bank’s “ease of doing business” ranking for sub-Saharan Africa, has a robust legal system and amenities that make it an attractive place to set up shop. Perhaps a bigger draw, though, is a 15% corporate-tax rate, falling to as little as 3% on foreign income.

Mauritius also boasts an extensive tax-treaty network with many sub-Saharan African countries. It has ratified 15 since 1992; only South Africa arranged more over the period. Twelve more are in the works. Double-taxation treaties (DTTs) specify the rate applied by source countries on cross-border income, such as...

via The Economist: Finance and economics Business Feeds

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