The agreement aims to promote economic and commercial links by avoiding double taxation, including the introduction of tax credits in Hong Kong and Mauritius or tax relief provisions:
(a) Mauritius withholding tax rates for Hong Kong residents on interest and royalties will be capped at 5%; and
(b) International shipping and air transport profits - such as income from leasing, ticket sales or interest on funds - earned by Hong Kong residents and derived from Mauritius will not be taxed in Mauritius.
(c) An entity resident (established, managed or controlled) in Mauritius and Hong Kong will only be resident for tax purposes in the State where its place of effective management is established.
(d) Tax exemption for business profits in the absence of a permanent establishment (PE)
The agreement is largely based on the United Nations model on double taxation. It does not, however, incorporate measures to combat artificial avoidance such as specific activity exemptions.
(e) There is currently no tax on capital gains arising from the sale of shares of non-residents not carrying on business in Hong Kong or Mauritius. However, the agreement provides a framework, should it be introduced. It could only apply to a company holding at least 50% of its real estate in Mauritius or Hong Kong, for gains not arising from shares listed on recognised stock exchanges, from a company reorganisation/merger/split/... or if it carries on business in its real estate.
(b) International shipping and air transport profits - such as income from leasing, ticket sales or interest on funds - earned by Hong Kong residents and derived from Mauritius will not be taxed in Mauritius.
(c) An entity resident (established, managed or controlled) in Mauritius and Hong Kong will only be resident for tax purposes in the State where its place of effective management is established.
(d) Tax exemption for business profits in the absence of a permanent establishment (PE)
The agreement is largely based on the United Nations model on double taxation. It does not, however, incorporate measures to combat artificial avoidance such as specific activity exemptions.
(e) There is currently no tax on capital gains arising from the sale of shares of non-residents not carrying on business in Hong Kong or Mauritius. However, the agreement provides a framework, should it be introduced. It could only apply to a company holding at least 50% of its real estate in Mauritius or Hong Kong, for gains not arising from shares listed on recognised stock exchanges, from a company reorganisation/merger/split/... or if it carries on business in its real estate.
With offices in Hong Kong and in Mauritius, Rosemont International can assist private client and their business. For more information, please contact Rosemont International in Hong Kong, Rosemont Management Mauritius or your Rosemont local offices.
Below is a comparison of the withholding tax rates applicable to dividends, interest and royalties, under the respective domestic tax law and the HK-Mauritius CDTA provided by Deloitte:
| Dividends | Interest | Royalties | Technical services | |
| HK non-DTA rate | 0% | 0% | 2.475% /16.5%NB1 | 0% |
Mauritius non-DTA rate |
0% | 0% / 15%NB2 | 15% | 5% |
| HK-Mauritius DTA rate | 0% / 5%NB3 | 0% / 5%NB4 |
5% | 0% |
Note : Domestic withholding tax rates will apply where they are more favorable than the DTAA provisions.
For mor information, please contact your local office.
NB1: The 4.95% rate generally applies. If the royalty is paid to an associated entity and the intellectual property has been owned by a person carrying on business in HK, the higher rate of 16.5% applies. If the taxpayer is eligible for two-tiered tax rates, 2.475% (or 8.25% if higher rate) applies on the first HKD 2 million of assessable profits and 4.95% (or 16.5% if higher rate) on the remaining amount.
NB2: 15% for payments made to a non-resident company in general; 0% for payments made to a bank or non-bank deposit-taking institution.
NB3: 0% if the beneficial owner is a company which holds directly at least 10% of the capital of the company paying the dividends throughout a 365 day period, or paid to the Government of Mauritius / HK, the HK Monetary Authority, the Exchange Fund of HK, the Bank of Mauritius, or any entity wholly or mainly owned by the Government of Mauritius / HK as may be agreed from time to time between the competent authorities of both jurisdictions; 5% in all other cases.
NB4: 0% if it is paid to the Government of Mauritius / HK, the HK Monetary Authority, the Exchange Fund of HK, the Bank of Mauritius, or any entity wholly or mainly owned by the Government of Mauritius / HK as may be agreed from time to time between the competent authorities of both jurisdictions; otherwise