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Mauritania: New Finance Law in Force

(Feb. 12, 2010) Mauritania's Finance Law for 2010, which was adopted on December 23, 2009, came into effect on January 1, 2010. It includes provisions on direct taxation, indirect taxation, and tax management.(Felix Buma, Mauritania: Finance Law for 2010 – Summary, IBFD TAX NEWS SERVICE, Feb. 4, 2010, subscription newsletter from [email protected])

The direct taxation provisions include the introduction of a special tax on financial transactions, applicable to corporations providing banking, financial, credit, or leasing services and to individuals offering financial services. In all cases, the taxable persons must be selling these services in Mauritania. The following kinds of income are, however, exempt from this tax:

  • premiums realized by financial institutions and public agencies authorized to carry out cash discount operations;
  • premiums on loans issued by foreign banks to local banks;
  • interest on loans and advances that local banks grant each other, and on loans granted to local banks by the Central Bank of Mauritania;
  • interest on loans granted by approved mutual or co-operative financial institutions to their members;
  • interest and commissions realized from transactions carried out within the framework of the normal functioning of diplomatic missions and similar international agencies;
  • profits realized by banks from foreign exchange transactions; and
  • interest and commissions on loans granted to the state. (Felix Buma, Finance Law for 2010 – Direct Taxation, IBFD TAX NEWS SERVICE, Feb. 4, 2010, subscription newsletter from [email protected].)

Those entities subject to this tax must keep complete accounting records and distinguish between taxable and tax-exempt transactions. The rate is 14% of the gross amount of interest, premium, or other financial income. (Id.)

Other changes to direct taxation include an increase in the amount of tax withheld against rental income, from the 14% specified in the General Tax Code to 18%; those who do not properly withhold the tax from rents they pay will lose the right to deduct the expense on their own taxes. (Id.) Those taxpayers who owe taxes on non-commercial profits will be required to make a smaller minimum lump-sum payment than in the past; it will be 3%, if their turnover is below MRO30 million (about US$112,000) and 2.5% if it is over that amount.

The new provisions on indirect taxation include an increase in the value-added tax rate, from 14% to 18%, and additions to the list of those products exempt from VAT, to include wheat, broken rice, wheat flour, wheat agglomerates in pellet form, glucose and syrup, yeast, baking powder, fuel for fishing vessels, other hydrocarbon products, caustic soda, caffeine, nicotine, various salts, penicillin and its derivatives, new diesel vehicles for public transportation that can seat more than ten people, and a variety of vegetable oils. In addition, motor vehicle taxes, the rates for which depend on horsepower, have been modified, and the local council tax imposed on some enterprises is now set at 1% of their turnover. (Felix Buma, Finance Law for 2010 – Indirect Taxation, IBFD TAX NEWS SERVICE, Feb. 4, 2010, subscription newsletter from [email protected].)

The new Finance Law also contains provisions on tax management. The provisions state that taxpayers who do not submit their tax returns on time or who do not provide the required documentation, as well as those who do not supply information to clarify or justify their tax returns when so requested by a tax inspector, “are subject to arbitrary taxation or automatically subject to tax.” (Felix Buma, Finance Law for 2010 – Tax Management, IBFD TAX NEWS SERVICE, Feb. 4, 2010, subscription newsletter from [email protected].)