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- Senegal’s unilateral decision surprised tax officials across Africa.
- Currently Zambia, Lesotho, Uganda and the Republic of Congo are also trying to renegotiate their treaties with the government in Port Louis.
Senegal has quietly ended its treaty for Avoidance of Double taxation (DTA) with Mauritius. Though the decision was taken earlier this year, the matter came to the attention of tax officials in the region only recently. Senegal’s unilateral decision surprised tax officials across Africa. Currently Zambia, Lesotho, Uganda and the Republic of Congo are also trying to renegotiate their treaties with the government in Port Louis.
Senegal had warned Mauritius that it will be forced to cancel the treaty if certain conditions were not met. According to Senegal, the DTA agreement, signed in 2004, between Senegal and Mauritius, had cost Senegal $257 million in tax revenue loss over the 17 years’ period. Speaking to the International Consortium of Investigative Journalists(ICIJ), Senegal tax official said that the problem with this tax treaty was that it was unbalanced.
Developing countries have become increasingly vexed about the role of Mauritius as a tax haven eating into their tax receipts. The deals are costing poor countries millions of dollars in tax revenue loss each year. In July 2019, ICIJ and journalists from 18 countries brought out ‘Mauritius Leaks ‘that exposed how multinational companies, supported by leading accounting and advisory firms like KPMG, used Mauritius as a tax haven. In the process, some of the world’s poorest countries suffered huge losses in tax revenue. ICIJ also revealed how a Canadian engineering giant avoided paying up to $8.9 million in taxes to Senegal with the help of a shell company in Mauritius.
