Mauritius Leaks reveal Africa is losing crucial tax revenues

Mauritius Leaks reveal Africa is losing crucial tax revenues to tax haven of Mauritius – Oxfam reaction

For immediate release: 23 July 2019

Responding to research published by the International Consortium of Investigative Journalists today that multinational corporations are using the tax haven of Mauritius to avoid paying millions of dollars of tax across Africa, Peter Kamalingin, Oxfam’s Pan Africa Director, said:

“Mauritius Leaks provide yet another example of how multinational corporations are gaming the system to shrink their tax bills – and cheating some of the world’s poorest countries out of the vital tax revenues they need to get children into school or ensure people can see a doctor when they are ill.

“The true scandal is that this – like most tax avoidance schemes – is completely legal. Real political will is needed urgently to rewrite global tax rules and introduce a global minimum effective tax rate that is paid by all multinational corporations no matter where they are based. This would put a stop to the damaging tax competition between countries and remove the incentive for profit shifting – effectively putting tax havens like Mauritius out of business.

‘'African governments should revise their tax policies with Mauritius and other tax havens and defend their tax revenues better. Countries do not need to wait for global action, unilateral action is possible.’'

Oxfam New Zealand’s Executive Director Rachael Le Mesurier said: "These revelations show the importance of political will for cracking down on tax avoidance. We need the New Zealand government to support the calls for a global minimum effective tax rate at the OECD negotiations.

“New Zealanders care about corporations and the super-rich paying their fair share like everyone else; Oxfam NZ's 'Fair Tax Now' campaign saw over 430 people write a submission to Ministers Nash and Robertson on priorities to take to the OECD, and many more have signed our petition calling for tax transparency legislation for multinationals.

“Without action from our political leaders, these companies and individuals can continue to game the system and cheat some of the world’s poorest countries of vital tax revenue to fund public services and help people lift themselves out of poverty."

Notes

Mauritius Leaks revealed that multinational corporations artificially but legally shifted their profits out of African countries where they do business to the corporate tax haven of Mauritius, where foreign income like interest payments are taxed at the very low rate of 3 percent. Unfair tax agreements signed between Mauritius and countries in Africa and Europe allow some companies to cut their tax bills even further.

Mauritius Leaks is a global investigation by the International Consortium of Investigative Journalists (ICIJ). For more details see: https://www.icij.org/investigations/mauritius-leaks/

Since 2014, a huge number of documents, including the Panama Papers and Paradise Papers scandals, have been leaked by ICIJ unveiling how tax evasion and avoidance have become standard business practice across the globe.

Countries from across the globe, including several African countries, are currently participating in a round of international tax negotiations under the OECD-G20 umbrella, including issues such as the introduction of a global minimum effective tax rate. To effectively curb profit shifting, countries must ensure the global minimum effective tax rate is set at an ambitious level and applied at a country-by-country basis without exceptions.

In 2016, Oxfam exposed Mauritius as one of the world’s 15 worst corporate tax havens in its report ‘Tax Battles.’ Download a copy of the report here.

On 28 May, 2019, the Tax Justice Network launched the Corporate Tax Haven Index (CTHI). Tax Justice Network Africa cited Mauritius as “among the most corrosive corporate tax havens against African countries”.

Company loans from Mauritius and nine other tax havens to African countries total over $80 billion. This means that for every $6 of foreign investment in Africa, $1 was a company loan from a tax haven. Two infographics detailing this information are available for download here.

Oxfam New Zealand has been campaigning for the New Zealand government to do more to stop tax avoidance to support poor countries and their people. A petition calling for legislation to be introduced requiring public, country-by-country financial reporting for all large multinational corporations has been signed by over 8600 people. For the Government's recent consultation on options for taxing the digital economy, we saw over 430 people write a submission calling for New Zealand to advocate at the OECD-G20 level for a global minimum effective tax rate and other changes to the international tax rules.

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