African Governments Are Paying for the World Bank's Mauritius Miracle

[TexasTowelie]

Ghost offices on the small island provide legal but questionable means of siphoning tax dollars away from poor countries and into the pockets of the global elite.


PORT LOUIS, Mauritius—The security guard at Malawi Mangoes’ registered address at an office at the St Louis Business Centre in downtown Port Louis is not sure if we’re in the right place. The staff at the front desk are bewildered by our request to speak to someone from the company. The otherwise modest office block has flat-screen televisions on the walls and glossy magazines with titles like Savile Row and Family Business on a table in a small waiting area.

After about 20 minutes, a woman in a suit appears, bearing apologies—she had been out to lunch. At first, she seems to mistake us for investors in Malawi Mangoes. We jump in to clarify: We’re journalists looking to talk to someone from the company, which in 2014 received a $5 million loan from the private investment arm of the World Bank, the International Finance Corporation (IFC). Our interlocutor appears confused, as if she knows little about the business, or why we might be attempting to learn more about it in Port Louis, Mauritius.

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Mauritius sits 1,200 miles off the eastern coast of southern Africa, in the Indian Ocean. It’s an isolated island, without an endowment of exploitable natural resources like oil or minerals. Simon Springett, the United Nations resident coordinator for the island, told us that when the country became independent from the United Kingdom in 1968, “economists basically said there’s no way Mauritius can survive as an independent nation-state.”

Sugar cane had been the country’s core crop for centuries. Sugar is still produced in Mauritius, but the island owes much of its modern prosperity to the development of another more controversial industry.

In 2018, Mauritius has an international reputation built around extremely low taxes—a flat corporate tax rate of 15 percent and an effective rate as low as zero to 3 percent for offshore companies—as well as high levels of financial secrecy. Mauritius has an international reputation built around extremely low taxes—a flat corporate tax rate of 15 percent and an effective rate as low as zero to 3 percent for offshore companies—as well as high levels of financial secrecy. Global businesses registered in Mauritius have assets valued at more than $630 billion, almost 25 times the country’s own GDP of $26 billion. Its offshore financial industry includes more than 21,000 registered businesses—almost 70 times the number of primary schools in the country. However, these firms don’t take up a lot of space; many of them exist only on paper, set up to benefit from the island’s cut-rate taxes and its “ask no questions” attitude.

Read more: https://foreignpolicy.com/2018/10/18/african-governments-are-paying-for-the-world-banks-mauritian-miracle-malawi-mauritius-offshore-tax-havens-evasion-ifc/

[PaulX2]

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