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AfricaMoney | October 20, 2017

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ActionAid: Deloitte advised on avoiding tax by investing via Mauritius

ActionAid: Deloitte advised on avoiding tax by investing via Mauritius

A 2013 Deloitte document called “Investing in Africa through Mauritius” shares blow-by-blow details of how the island nation is being promoted as a favoured tax haven for use by big businesses operating in Africa. (Image: The Guardian)

In what could be a big blow to Mauritius’ assertions that the island nation is not a tax haven, one of the world’s Big Four accountancy firms, Deloitte, was discovered to have offered advice to large companies on how tax could be avoided in African countries by structuring business through the island economy. The presentation has come to light following an ActionAid investigation released on Sunday.

A 2013 Deloitte document called “Investing in Africa through Mauritius” shares blow-by-blow details of how the island nation is being promoted as a favoured tax haven for use by big businesses operating in Africa. While the strategy described in the presentation is entirely legal, it lies in a morally grey zone as implementing it could deprive poor African countries of vitally needed tax revenue.

To make things worse for Deloitte, and Mauritius, the document even goes ahead to illustrate how tax can be avoided by giving the example of Mozambique. The presentation shows how withholding tax can potentially be reduced by 60 per cent and capital gains tax by 100 per cent for companies that operate in Mozambique.

What should give the audience for the presentation pause for thought is that Mozambique is one of the poorest countries on the planet, where over 50 percent of people l live below the poverty line and average life expectancy is only 49.

Incidentally, the document was part of a presentation given by Deloitte in China in June this year at a conference attended by more than 80 major UK, western and Chinese companies with interests in Africa.

The document was presented at the conference two weeks before the G8 summit when David Cameron condemned tax avoidance both in the UK and in developing countries.

ActionAid Tax Policy Adviser Toby Quantrill said that big businesses have a vital role to play in economic development in poor countries, but, equally important, they also have to act in a socially responsible way.

According to the Organisation of Economic Co-operation and Development developing countries lose more than three times more money to tax havens than they receive in aid.

A Deloitte spokesperson responded to ActionAid’s investigation by saying that it was wrong to describe applying double tax treaties, such as the treaty between Mauritius and Mozambique, as tax avoidance. Such treaties are freely negotiated between the Governments of the countries involved, the spokesperson noted.

Last year Deloitte generated more than $32 billion in revenue – more than any other Big Four company.

Source: Economic Voice

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