South Africa-Mauritius tax treaty enters into force

The South African goverment has announced that a new tax treaty with Mauritius was gazetted on June 17 and thus entered into force on May 28.

The treaty, signed May 17, 2013, replaces the 1996 South Africa-Mauritius tax treaty which provided for zero withholding on interest and royalties.

The new tax treaty provides for a 10 percent tax rate in the source country on the gross amount of interest. Withholding tax on royalties is set at a 5 percent rate. Withholding tax on dividends is set at 5 percent if the beneficial owner is holds at least 10 percent of the capital of the company paying the dividends, and is 10 percent in other cases.

The new agreement also provides that the competent authorities of the two states will, by mutual agreement, determine which country will tax dual residents other than individuals. To reduce uncertainty, the counties signed a Memorandum of Understanding which sets out the factors that the two competent authorities will use to decide the country of residence.

See:  

• Media Statement New South Africa-Mauritius DTA

• Government Notice 471 : 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

• Memorandum of Understanding