Mali, in conjunction with Niamey, announced its intention to terminate the tax agreement established between Mali and France over fifty years ago. The agreement aimed to prevent double taxation of individuals and businesses. According to Bamako, the goal is to end what is considered an “unbalanced” situation and make French companies, in particular, pay.
By terminating this tax agreement, Mali aims to recover, as stated in the official statement, a “considerable loss.” For businesses, such agreements are intended to attract investments. This was the objective when signed in 1972, under the military regime of Moussa Traoré, whose transitional authorities now claim the legacy. Mali was emerging from its socialist period at that time.
However, times and needs have changed since then. “Mali is currently facing difficulties in terms of tax revenues. The global crisis impacts companies in general and affects the level of tax revenues,” analyzes Modibo Mao Macalou, an economist and former presidential advisor, now leading the consulting firm IBS in Bamako. He adds, “The idea is to mobilize more domestic revenues, and I think that’s the goal the transitional Malian authorities decided to denounce this tax agreement because there are many more French companies operating in Mali than Maliaomany more French companies are operating investments in Mali”
However, French companies in Mali are subsidiaries under Malian law, already paying their taxes in the country. Will they have to pay new taxes in Mali? Will France subject them to double taxation? In any case, according to Modibo Mao Macalou, the effect will be mainly dissuasive: “In the decision to invest in a country the tax regime plays an important role. So now, French companies will either reduce their investments or move elsewhere. It will discourage French investments in Mali.” Under these circumstances, it’s challenging to estimate the amounts Mali will gain or lose, short-term or long-term. None of the experts interviewed by “Weafrica24” ventured to do so. And the transitional Malian authorities did not specify it during their announcement.
According to an active member of Franco-Malian economic circles, this “highly political” measure could also penalize Bamako. French investments, already slowing down, could decrease further. “This will reduce the results and therefore the agility of companies,” decrypts Etienne Giros, President of the Council of French Investors in Africa. “Either they will accept that their profits in France decrease, or they will pass on this new charge to their African subsidiaries. It’s all the benefits of a partnership that disappear.”
A Limited Impact
In any case, it’s bad news for French companies in the Sahel. Until now, they could deduct from their taxes in France the amount withheld at source in African countries. For Etienne Giros, this is a new negative signal “that will impact French companies that grant loans, invoice services, or expect to receive dividends.” “It’s not very good because, the more we harmonize business and international trade, the more there is development, investment, and the fight against poverty,” he says.