Satellite tax dodgers used Mauritius to pay 0.03% tax
Satellite companies that escaped taxation through Mauritius offshore ended-up paying a meagre 0.03 percent of the tax.
Mauritius offshore system allows this to happen, experts say.
They say it is to the detriment of the nation’s where the real economic activities take place.
The International Consortium of International Journalists (ICIJ) uncovered the deal while digging into the famous Panama papers.
In addition, Mauritius financial and company laws structures provide a tax advantage.
“Intelsat’s structure “takes advantage” of these laws.
“I would honestly think, by now, that the tax treaty, with Mauritius, should have become discredited.
“They simply do not grant the benefits to the countries,” says Ezenagu.
The Paradise Papers exposes millions of files from law firm Appleby and its clients.
One such client is the satellite’s co-owner, Intelsat.
Following the satellite’s 2011 launch the African tax haven strategy proved lucrative.
This became evident according to dozens of invoices, tax returns and financial statements from the Paradise Papers.
The companies behind the New Dawn Satellite channelled millions of dollars through offshore companies in Mauritius.
Using Mauritius offshore, these companies dodge taxation policies in Africa to pay very little from huge profit gains.
Nevertheless, the trick was to use two kinds of offshore companies.
“One company to avoid local taxes, another to pay as little as possible on bills paid were used,” said ICIJ.
The plan was to avoid higher taxes overseas by using treaties signed between Mauritius and its African neighbours.
The primary money-making company estimated that it would pay $22,500 in taxes on $75 million in revenue. Whic is just 0.03 percent.
In the light of a 17-year lifespan, the company predicted it would earn $936 million.
Comparitively, it never pay taxes above $300,000.
The Mauritius arrangement lasted until 2013 when Intelsat closed the companies down after unexpectedly low financial returns.
However, the company’s tax return that year reflects that it paid 0.09 percent tax on $31.6 million.
Needless to say, the offshore system and a suspected Ponzi scheme were also of interest in the South African media.