Most sub-Saharan African countries have poorly detailed tax legislation and interpretation of their tax guidelines is sometimes ambiguous. But a few countries have managed to position themselves as tax havens for foreigners.
Mauritius and Seychelles are among the most prominent. Foreign individuals or businesses are taxed at low rates. Some tax havens help people to legally hide money with little or no government oversight from their home countries. If there are records of transactions, these may not be available to other governments or tax agencies.
Here are some other African countries that have achieved tax-haven status but are somewhat under the radar.
Sources; The Guardian, The Atlantic, USA TODAY, BUSINESS TECH, The Africa Report, Tunisia Live, Business Weekly
The country is located strategically between three continents; Africa, Europe and Asia. Since 1949, the tiny East African nation has been operating a free-port, Djibouti Free-zone. This allows tax breaks, five to ten year exemptions on tax for companies among other incentives to foreign companies. It also allows foreign companies to legally make it their domicile home or place of business. They are able to make huge profits and pay little taxes compared to what they would have incurred in their home countries.
It is the third biggest economy in Africa, after Nigeria and Egypt. The nation’s tax regulations allows a company to pay taxes where it is managed from or incorporated. It has Double Tax Agreements (DTA) with Mauritius; one of Africa’s best known tax havens with no capital gains tax and a corporate tax rate of 3 percent. This agreement enables companies doing business in the nation but are managed from Mauritius to pay low corporate and dividend tax rates.
The North African nation has a free economic zone in Tangier, which is the country’s oldest city. Tangier Exportation Free Zone provides a tax-free environment for foreign and multinational companies keen to avoid paying corporate tax. It was once described by the International Monetary Fund (IMF) as an offshore center that is open to international banks and financial institutions. Companies only pay tax on activities that generate income in the North African nation. This provides a tax avoidance avenue for foreign companies.
Liberia, a west African nation, has secretive laws that help individuals to set up companies without revealing their identities. This is done online from any geographical region in the world. This helps them to avoid paying taxes on their assets and law enforcement agencies in the impoverished nation. According to the European Union, Liberia has been used by secret companies to hide money ill-gotten through sale of drugs, corruption and terrorism.
The North African nation has one of the highest rates of tax fraud in the world. More than 54 percent of the country’s economy is not under state control. Individuals and business companies are able to avoid tax-compliance, and the tax evasion costs Tunisia between five to seven million dinars annually.
The Southern Africa nation is one of the continent’s most politically stable democracies. In 2011, during a G20 Summit, former France president Nicholas Sarkozy accused the nation of being a tax haven due to economic laws and regulations that were not stringent enough to prevent tax evasion and other financial crimes. The nation’s International Financial Service Centre (IFSC), established in 1999 has helped companies to pay minimal tax rates. Multinational companies domiciled in the nation have evaded taxation in their home countries.