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Home News & Events TAX LAW NEWS: Offshore Financial Centers Rush to Africa to conclude IPPAs

TAX LAW NEWS: Offshore Financial Centers Rush to Africa to conclude IPPAs

Sunday, 22 September 2013 11:23

It has been recently announced that a surge in foreign investment in Africa which last year saw some $ 50bn of foreign direct investment (FDI) by international corporation such as IBM  and Coca-Cola, has given rise to a frenzy amongst offshore financial centres to enter into Investor Promotions and Protection Agreements (IPPAs) with the aim to reduce the tax bills of overseas companies and at the same time, safeguard their investments in Africa.

The Financial Times has remarked that tax deals "are a crucial step for companies investing in emerging countries in which security of tenure and lower taxes are critical."

It has been reported that Mauritius which boasts one of Africa's largest offshore financial centres, is leading the way with already signed 19 tax agreements with African countries and is at present negotiating another 3 of such agreements.

In the past decade, Mauritius has accounted for about 40% FDI flows into India as a result of favourable tax agreement with New Dehli. The frenzy amongst offshore financial centres to rush to Africa which include Singapore, Luxemburg and the Netherlands, is said to be picking up 'a race pace' to address the increase in the oil, gas and mining markets of Africa.