Hong Kong and South Africa have signed an agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, the Hong Kong government announced October 17.
Under the agreement, tax paid in Hong Kong by South African residents will be allowed as a deduction against tax payable in South Africa. Also, South African tax paid by the companies on Hong Kong-sourced income will be allowed as a credit against the tax payable in Hong Kong.
The agreement reduces South Africa’s withholding tax on royalties from 15 per cent to 5 per cent; on dividends from 15 per cent to 10 per cent or 5 per cent, depending on the percentage of shareholdings; and caps South Africa’s interest withholding tax on Hong Kong residents at 10 per cent.
The agreement also provides that Hong Kong airlines operating flights to South Africa will be taxed in Hong Kong’s corporation tax rate and will not be taxed in South Africa. Profits from international shipping transport earned by Hong Kong residents that arise in South Africa, which are currently subject to tax there, will not be taxed in South Africa under the agreement.
The agreement also incorporates an article on exchange of information.
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