Hong Kong – Mauritius DTAA enters into force as from 23 June 2023

In previous editions of our MITCO E-news, we informed our valued readers of the Double Taxation Avoidance Agreement (DTAA) signed by Hong Kong on 7 November 2022 and subsequently of the procedures undertaken by the Inland Revenue Department (HK) for the ratification of the said DTAA.

 

We confirm that the Hong Kong – Mauritius DTAA is now effective as from 23 June 2023.  Given that Mauritius has a fiscal year of 30 June, the DTAA is considered to have taken effect as from 1 July 2023 for any withholding tax.

 

In addition to eliminating double taxation on the same income streams by allowing a foreign tax credit against its jurisdictional tax for the taxes paid in the other jurisdiction (article 22 of the DTAA), the DTAA also allows for reduced withholding tax (WHT) on certain streams of income including the following:

 

Income Stream	Interest	Royalties
Hong Kong – local WHT	0%	Maximum 4.95%
Mauritius – local WHT	0% (see note 1) or 15%	0% (see note 2) or 15%
Reduced rates under DTAA	0% or 5%	0%

 

1) Exempt if the non-resident does not carry on any business in Mauritius and such interest is paid by either an entity that holds a Global Business License (GBL) out of its foreign sourced income or a bank holding a banking license under the Banking Act insofar as the interest is paid out of its gross income from banking transactions with non-residents and entities holding a GBL.

 

2) Exempt under the Mauritian tax laws if it is paid out of the foreign sourced income of a company.

 

It is to be noted that both Mauritius and Hong Kong do not impose any WHT on dividend or capital gains on disposal of shares.