China-Africa Investment ForumBeijing June 2013

A presentation by Mardemootoo Solicitors

FOCUS: MAURITIUS

Mauritius...Star & Key of the Indian Ocean

Mauritius:a strategic stop-over into

Africa

Mauritius

Tax treaty network

Mauritius has ratified (r), awaiting ratification (a), awaiting signature (s) or is negotiating (n) tax treaties with 24 African countries. These countries are Botswana (r), Lesotho (r), Madagascar (r), Mozambique (r), Namibia (r), Rwanda (r), Senegal (r), Seychelles (r), South Africa (r), Swaziland (r), Tunisia (r), Uganda (r), Zimbabwe (r), Zambia (r), Republic of Congo (a), Egypt (a), Kenya (a), Nigeria (a), Ghana (s), Gabon (s), Algeria (n), Burkina Faso (n), Tanzania (n), Malawi (n).

Mauritius

AfricanCountry

Corporate Income Tax Rate

CapitalGains

BranchTax Rate DividendsDividends InterestInterest RoyaltiesRoyalties

AfricanCountry

% % %

Non-treaty rates%

Treaty with MU%

Non-treaty rates%

Treaty with MU %

Non-treaty rates%

Treaty with MU%

Botswana 22 22 30 7.5 5/10(1) 15 12 15 12.5

Mozambique 32 32 32 10/20(2)

8/10(3) 20 8 20 5

Namibia 34 0 34 10/20(4)

5/10(5) 10 10 10.2 5

1. 5% of the gross amount of the dividends if the beneficial owner is a company which owns at least 25% of the capital in the company paying the dividends; 10% of the gross amount of the dividends in all other cases.

2. 10% rate applies to dividends paid on shares listed on the Mozambique stock exchange

3. 8% of the gross amount of the dividends if the beneficial owner is a company which holds at least 25% of the capital of the company paying the dividends; 10% of the gross amount of the dividends if the beneficial owner is a company which holds less than 25% the capital of the company paying the dividends

4. This is a final tax applicable to nonresidents. Dividends paid to nonresidents are subject to a final 10% withholding tax if the recipient of the dividend is a company that holds at least 25% of the capital of the company paying the dividend and if it is the beneficial owner of the shares. For all other cases, the dividend withholding tax rate is 20%. Dividends paid out of oil and gas profits are exempt from withholding tax.

5. 5% of the gross amount of the dividends if the beneficial owner is a company which holds directly at least 25% of the capital of the company paying the dividends; 10% of the gross amount of the dividends in all other cases.

1. Tax is imposed on capital gains on sales of immovable property and listed and unlisted marketable securities. The tax rates on the disposal of assets acquired before 1 February 2009 are 1% for listed marketable securities and 5% for unlisted marketable securities and immovable property. The tax rates on disposal of assets acquired on or after 1 February 2009 are 1% for listed marketable securities, 5% for unlisted marketable securities and 20% for immovable property.

2. The 10% rate applies to dividends paid by companies listed on the Zimbabwe Stock Exchange to resident individuals and nonresidents. The 15% rate applies to other dividends paid to resident individuals and nonresidents.

3. Lower rate applies to companies holding at least 25% of capital.

AfricanCountry

Corporate Income Tax Rate

CapitalGains

BranchTax Rate DividendsDividends InterestInterest RoyaltiesRoyalties

AfricanCountry

% % %

Non-treaty rates%

Treaty with MU%

Non-treaty rates%

Treaty with MU %

Non-treaty rates%

Treaty with MU%

Uganda 30 30 30 15 10 15 10 15 10

Zimbabwe 25 1/5/20(1) 25 10/15

(2)10/20(3) 15 10 15 15

Rwanda 30 30 30 15 0 15 0 15 0

1. The withholding tax on dividends was repealed in 2008. However, withholding tax on dividends continues to apply to certain entities.

2. 5 % of the gross amount of dividends if the company paying the dividends is a company eligible under the Investment Code or a venture capital company

3. The 6% rate applies to interest on long-term bonds. The 8% rate applies to bank interest. The 20% rate applies to interest on deposit receipts. The 16% rate applies to other interest payments.

AfricanCountry

Corporate Income Tax Rate

CapitalGains

BranchTax Rate DividendsDividends InterestInterest RoyaltiesRoyalties

AfricanCountry

% % %

Non-treaty rates%

Treaty with MU%

Non-treaty rates%

Treaty with MU %

Non-treaty rates%

Treaty with MU%

Lesotho 25 25 25 25 10 25 10 25 10

Madagascar 20 20 20 0 (1)

5/10(2) 20 10 10 5

Senegal 25 25 25 10 06/8/16/20(3)

0 20 0

1. The current DTA provides protection against South African capital gains tax (“CGT”) for a Mauritian company owning shares in a South African company holding immovable property. However, the capital gains article of the new DTA now specifically provides that a country may tax gains derived from the alienation of shares deriving more than 50% of their value directly or indirectly from immovable property situated in such country.

2. Dividends: In terms of the current DTA, the South African withholding tax on dividends will be reduced to 5% if the beneficial owner is a Mauritian company which holds at least 10% of the capital of the company paying the dividends, while in all other instances, the dividends tax may not exceed 15%. The fall-back position has now been amended to reduce the maximum dividends tax rate to 10%.

3. South Africa does not levy a withholding tax on interest. However, with effect from 1 July 2013, a 15% withholding tax will be levied (subject to certain exemptions) on interest paid to a nonresident, unless the rate is reduced under a tax treaty.

4. Interest: The current DTA provides for the country of residence of the recipient of interest to have the taxing rights if such recipient is the beneficial owner of the interest. A Mauritian lender would thus not be subject to the new South African withholding tax on interest (once it comes into effect) if the Mauritian lender is the beneficial owner of the interest. However, the new DTA does not provide for an exemption but instead caps the tax on interest which may be imposed by the source country, to 10% of the gross amount of the interest.

Mauritius does not currently impose a withholding tax on interest paid by so-called GBL1 or GBL2 companies. South African lenders to Mauritian borrowers would thus as a general rule not be negatively affected by the amendment of the interest article, while Mauritian lenders to South African borrowers would on the other hand be prejudiced.

5. The withholding tax on royalties paid to a nonresident is 12% unless the rate is reduced under a tax treaty. The rate is proposed to be increased to 15% as from 1 July 2013 to be in line with the withholding taxes on dividends and interest.

6. Royalties: The current exemption from royalties withholding tax has been replaced with a 5% maximum rate.

Source of update on the DTA with South Africa: Bowman Gilfillan tax team

AfricanCountry

Corporate Income Tax Rate

CapitalGains

BranchTax Rate DividendsDividends InterestInterest RoyaltiesRoyalties

AfricanCountry

% % %

Non-treaty rates%

Treaty with MU%

Non-treaty rates%

Treaty with MU %

Non-treaty rates%

Treaty with MU%

South Africa 2818.648(1)

28 15 5/10(2) 0(3) 10

(4) 12(5) 5(6)

1. Resident and nonresident companies are subject to tax on their income derived from Zambian sources. Resident companies are also subject to tax on profits derived from a business carried on partly inside, and partly outside, Zambia. A company is considered resident in Zambia if it is incorporated in Zambia or if the central management and control of the company’s business or affairs are exercised in Zambia.

2. 5 % of the gross amount of the dividends if the beneficial owner is a company which holds at least 25 per cent of the capital of the company paying the dividends; or 15 % of the gross amount of the dividends in all other cases.

Source for figures: Ernst & Young 2013 Worldwide Corporate Tax Guide.

AfricanCountry

Corporate Income Tax Rate

CapitalGains

BranchTax Rate DividendsDividends InterestInterest RoyaltiesRoyalties

AfricanCountry

% % %

Non-treaty rates%

Treaty with MU%

Non-treaty rates%

Treaty with MU %

Non-treaty rates%

Treaty with MU%

Swaziland 30 0 30 15 7.5 10 5 15 7.5

Tunisia 30 30 30 0 0 20 2.5 15 2.5

Zambia 15 to 40(1) 0 15 to

40 15 5/15(2) 15 10 20 5

Additional Investment Benefits & Protection:• Southern African Development Community

(SADC)• Common Market for Eastern and Southern

Africa (COMESA)• Indian Ocean Commission (IOC)• Africa Growth and Opportunity Act (AGOA)• African-Pacific-Caribbean (ACP)• L'Organisation pour l'Harmonisation en Afrique

du Droit des Affaires (OHADA)

SADC

SADC: Common Free Trade Area with 15 countries

• Population: 258 million• GDP: USD 472 billion

COMESA

COMESA: Common Free Trade Area with 13 African countries

• Population: 430 million• Annual import bill: USD 152 billion• Annual export bill: USD 157 billion

In addition to double taxation avoidance agreements, Mauritius has signedInvestment Protection and Promotion Agreements (IPPAs) with 19 African Countries of which 6 are already in force and 13 are awaiting ratification

IPPAs:

• Free repatriation of investment capital and returns

• Guarantee against expropriation• Most favoured nation rule with respect to

investment and compensation for losses due to war and riots

In Force Awaiting RatificationBurundi BeninMadagascar BotswanaMozambique CameroonSenegal ComorosSouth Africa GhanaTanzania Guinea Republic

MauritaniaRepublic of CongoRwandaSwazilandChadZimbabweKenya

Investment into Zimbabwe as at March 2013:• Mauritius: USD 3.4 Billion

• China: USD 1.7 Billion

• South Africa: USD 0.4 Billion

Setting up anoperational base

for Africa in Mauritius

Investment vehicles:• Global Business Company- GBC1 and GBC2

• Domestic Companies

• Trusts

• Limited Liability Partnerships

• Foundations

• Sociétés

Index Global Rank Africa Rank

Environmental Performance Index 2010 6th 1st

Fraser institute economic freedom 9th 1st

2012 Index of Economic Freedom 8th 1st

Forbes Survey of Best Countries for Business 2011 19th 1st

World Bank Ease of Doing Business 2012 23rd 1st

Democracy Index 2011 24th 1st

Global Enabling Trade Index 33rd 1st

Knowledge Economy Index 2012 62nd 1st

Mo Ibrahim Index of African Governance 1st 1st

International Rankings:

• Socio-Economic stability

• High standard work and live environment

• Rule of law

• Easy access / favourable timezone

Holistic Investment Environment: