1. 08 October 2013
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DTAA & IPPA approved by Mauritius and Gabon
The Double Taxation Avoidance Agreement (DTAA) between Mauritius and Gabon has been
confirmed by Mauritius. The Minister of Finance will specify in the government gazette the
effective date of the DTAA after the completion of all approval procedures by both Mauritius and
Gabon. The provisions will apply as from the 1st January following its entry into force.
There are many advantages of using a Mauritius Company for Investments in Gabon. When a
resident of Mauritius gains income from Gabon, the amount of tax on such income in Gabon may
be credited against the Mauritius tax. Furthermore, where a company resident in Gabon pays a
dividend to a resident of Mauritius who controls directly or indirectly at least 5% of the company
paying the dividend, credit shall take into account the underlying tax paid by the Gabonese
company out of which the dividend was paid.
The DTAA explains the term “permanent establishment” which is furnishing of services including
consultancy services through employees, provided that such activities continue for the same for a
period or periods aggregating to more than 6 months within any 12-months period.
In case of exit from the Gabonese investment, gains arising on the disposal of the shares by the
Mauritius Company will be taxable only in Mauritius by virtue of the DTAA. There is no capital
gains tax in Mauritius.
In addition to the normal corporate tax, the profit of a permanent establishment in Gabon is
subject to a 10% withholding tax. However, the 10% withholding tax is not applicable on income
derived by a permanent establishment of a Mauritius Company in Gabon.
A dividend paid by a Gabonese company to a non-resident is normally subject to a withholding
tax of 15%. However, under the DTAA, the rate is reduced to 5% if the dividend is paid to a
resident of Mauritius. This results in a tax saving of 10% by using the Mauritius route.
An Investment Promotion and Protection Agreement (IPPA) has also been signed between
Mauritius and Gabon. The IPPA will encourage and shelter investment flows between the two
Countries.
Intuit Research Team
Intuit Management Consultancy
India Tel: +91 9840708181 Fax: +91 44 42034149
Dubai Tel: +971 4 3518381 Fax: +971 4 3518385
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