Hong Kong (HK) to ratify HK-Mauritius DTAA
In our November 2022 Enews Edition, we informed our valued readers of the Double Taxation Avoidance Agreement (DTAA) signed by Hong Kong and Mauritius on 7 November 2022.
The Inland Revenue Department (HK) has since initiated procedures to ratify the DTAA (The “Order”). The Order will be gazetted today, 28 April 2023, in Hong Kong and thereafter will be tabled to the Legislative Council (HK) on May 3 for negative vetting.
The DTAA will come into effect once the ratification procedures have been completed by both contracting states.
It will be recalled that the benefits available under the DTAA include:
(a) provide tax certainty to investors of the two countries in their dealings with Mauritius or Hong Kong, as the case may be, including though not restricted to the elimination of double taxation by way of tax credit especially for a Hong Kong resident company deriving income from Mauritius, where they will be able to claim tax suffered in Mauritius as a tax credit in Hong Kong subject to a cap of Hong Kong tax suffered on that income. It is interesting to note that in Mauritius, the domestic laws already allow for tax suffered abroad to be claimed as a tax credit in Mauritius irrespective of whether there is a DTAA in place or not;
(b) provide mechanisms to:
(i) combat tax evasion and other malpractices through the collaboration between the two authorities in terms of exchange of information and lending assistance to each other for tax due to the concerned tax authorities; and
(ii) resolve tax disputes that may arise, through a mutual agreement procedure; and
(c) create a conducive environment for greater cross-border investment flows between the two countries by providing certain tax incentives.