(June 19, 2015)
On June 17, 2015 the National treasury of the Republic of South Africa published a press release announcing that the new Agreement between the Government of the Republic of South Africa and the Government of the Republic of Mauritius for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income (Hereafter: the DTA) entered into force on May 28, 2015. The DTA replaces the South African – Mauritius tax treaty from 1996.
Based on Article 28 of the DTA the fact that the DTA entered into force on May 28, 2015 means that the DTA generally applies from January 1, 2016.
Below we will mention some of the paragraphs included in the DTA that we find interesting.
According to paragraph 3 of Article 2 (“TAXES COVERED”) of the DTA the existing taxes to which this DTA shall apply are:
(a) in Mauritius, the income tax; and
(b) in South Africa:
(i) the normal tax;
(ii) the secondary tax on companies;
(iii) the withholding tax on royalties; and
(iv) the tax on foreign entertainers and sportspersons;
With respect to permanent establishments paragraph 3 of Article 5 (“PERMANENT ESTABLISHMENT”) determines the following:
(a) a building site or a construction, installation or assembly project, or supervisory activities in connection therewith, but only if the site, project or activity lasts more than twelve months;
(b) the furnishing of services by an enterprise through employees or other personnel engaged by an enterprise for such purpose, but only where activities of that nature continue (for the same or a connected project) within the Contracting State for a period or periods exceeding in the aggregate 183 days in any twelve-month period commencing or ending in the fiscal year concerned;
(c) the performance of professional services or other activities of an independent character by an individual, but only where those services or activities continue within a Contracting State for a period or periods exceeding in the aggregate 183 days in any twelve-month period commencing or ending in the fiscal year concerned.
With respect to dividend withholding taxes paragraph 2 of Article 10 (“DIVIDENDS”) determines the following:
“However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the recipient is the beneficial owner of the dividends, the tax so charged to the beneficial owner shall not exceed:
(a) 5 per cent of the gross amount of the dividends if the beneficial owner is a company which holds at least 10 per cent of the capital of the company paying the dividends;
(b) 10 per cent of the gross amount of the dividends in all other cases.”
With respect to interest withholding taxes paragraph 2 of Article 11 (“INTEREST”) determines the following:
“However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the interest.”
With respect to royalties withholding taxes paragraph 2 of Article 12 (“ROYALTIES”) determines the following:
“However, such royalties may also be taxed in the Contracting State in which they arise, and according to the laws of that State, but if the beneficial owner of the royalties is a resident of the other Contracting State, the tax so charged shall not exceed 5 per cent of the gross amount of the royalties.”
With respect to capital gains paragraph 4 of Article 13 (“CAPITAL GAINS”) determines the following:
“Gains derived by a resident of a Contracting State from the alienation of shares deriving more than 50 per cent of their value directly or indirectly from immovable property situated in the other Contracting State may be taxed in that other State.”
Furthermore the DTA contains an article regarding a Mutual Agreement Procedure (Article 24), regarding the Exchange of Information in tax matters (Article 25) and regarding the Assistance in Collection of Taxes (Article 26).
Click here to be forwarded to the text of the Agreement between the Government of the Republic of South Africa and the Government of the Republic of Mauritius for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, as available on the website of the National Treasury of the Republic of South Africa.
Click here if you are looking for the South African – Mauritius tax treaty from 1996. When you click subsequently click on South Africa or Mauritius you will be forwarded to a governmental website of the respective country where it published the texts of the DTAs it has concluded.
For further information click here to be forwarded to a press release as issued by the National Treasury of South Africa regarding the entry into force of the new South African – Mauritius Tax Treaty.
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