South Africa Mauritius Double Tax Agreement

Walker said Mauritius is generally chosen for a place of detention for investment in Africa because it has an extensive network of double taxation treaties with African countries, adding that «this could be a public relations disaster for Mauritius – regardless of what the real impact of the changes might mean, and even if Mauritius remains favourable as a holding company for African investments, the mere fact that the new convention allows interest and royalty taxes will damage its reputation as a «gateway to Africa». The old tax treaty contained a «tax saving» provision, but it was removed from the new treaty. Under a tax-saving provision, the foreign investing country authorizes the credit of fictitious taxes that the country of investment waives due to a tax incentive or holiday in the country of investment. However, there was concern that the provision of the old convention would be used for «double non-taxation». There will be a new «breach of equality» clause in the contract to deal with the situation where a company or other entity appears to be based in both states. It provides that the tax authorities of each State shall endeavour to settle the matter by mutual agreement. The South African Ministry of Finance says the test has been proposed to become the accepted test of the Organisation for Economic Co-operation and Development (OECD) model contract as part of its Base Erosion and Profit Shifting (BEPS) initiative. South Africa and Mauritius have signed a Memorandum of Understanding setting out the factors that both countries will take into account when deciding on the country of residence. This includes where board meetings take place, but also «where the day-to-day management» of the company is continued. If a company is deemed to reside in both Contracting States, the competent authorities shall determine by mutual agreement the registered office of the company for the purposes of the contract.

If the authorities do not reach an agreement, the commitment shall be considered not to fall within the scope of the Treaty, with the exception of the provisions of Article 25 (exchange of information). Both counties apply the imputation method to eliminate double taxation. There is also a provision for a tax saving credit, whereby Mauritius considers the tax payable in South Africa to be the tax otherwise due, but which has been reduced or cancelled by South Africa in order to promote economic development. According to a recent announcement by the Ministry of Finance and Economic Development of Mauritius, the new tax treaty with South Africa entered into force on 28 May 2015. The agreement, signed on May 17, 2013, replaces the 1996 Income Tax Convention between the two countries. Mauritian holding companies are often used as a structure for foreign companies investing in Africa. Tax activists such as Action Aid have criticised the use of holding companies in Mauritius, calling the practice «tax evasion», suggesting that it «withholds hundreds of millions of dollars in taxes from poor countries». Provides national, contractual and European marginal tax rates for more than 5,000 country combinations for 9 different cash flows. The agreement includes Mauritius income tax and normal South African tax, secondary corporate tax, withholding tax on royalties and tax on foreign artists and athletes. The following capital gains realized by a resident of a Contracting State may be taxed by the other State: Allows a rapid calculation of the tax costs and benefits of cross-border transactions, taking into account all possible transaction combinations and optimal routes. A protocol to the convention, signed on the same day, contains the provision that if South Africa concludes a tax treaty with another state that provides for a lower tax rate on dividends, South Africa must inform Mauritius and enter into negotiations to ensure comparable treatment. The old tax treaty was silent on the treatment of real estate-rich companies.

The capital gains provision of the new agreement now expressly provides that a state may tax capital gains from the sale of shares that directly or indirectly derive more than 50% of their value from immovable property located in that state. The new contract does not change the maximum withholding tax rate on dividends of 5% for companies that hold 10% or more of the company`s dividend capital. However, the new agreement lowers the withholding tax rate for other owners from 15% to 10%. Calculates TP ratios using different TP methods and calculates the difference between target and actual ratios. Starting in April 2020, new regulations will be introduced to hold businesses accountable for determining the tax status of entrepreneurs working through personal service companies (PSCs). Repository with thousands of tax treaties, MODELS FROM THE OECD, UN and THE UNITED STATES, relevant European directives, technical declarations and more. The 1996 tax treaty between the two countries will be terminated with effect from May 28, 2015 and will cease to apply for any period to which the provisions of the new agreement apply. Calculate the total tax costs and benefits of a cross-border transaction, including withholding tax, participation exemption, and foreign tax credit rules. Calculates the overall tax costs of the hypothetical scenarios based on the structure of the legal entity, taxable income and cross-border transactions.

Guide to Third Party Financing in International Arbitration Country-specific calculators to determine how net operating losses can be used in carry-forward and carry-forward years. | out-law news 24 June 2015 | 11:30 a.m. .m | 3 min. reading time. Eloise Walker said: «The new capital gains tax article only allows South Africa to tax indirect capital gains – i.e. capital gains from the sale of shares of a South African company by a non-resident company – if more than 50% of the value of the South African company comes from land in South Africa – which would include mining. It would be much more controversial if this measure applied to indirect sales of companies that hold other South African assets such as South African companies. This is the problem Vodafone has had in its high-profile dispute with Indian tax authorities. Provides value added tax (VAT), goods and services (GST) and other indirect tax rates for more than 100 countries. .

English translations of major tax forms for more than 80 countries, including tax return forms, contract performance forms, source deduction forms and more. The old tax treaty stipulated that interest and royalties were taxable only in the State where the owner was resident, so South Africa could not levy taxes on interest and royalties belonging to Mauritian resident companies or individuals. However, the new agreement will allow South Africa to levy a 10% tax rate on interest accrued in South Africa to a resident of Mauritius and a 5% tax rate on royalties. Detailed tax advice for companies operating in more than 100 countries, including summaries and snapshots of key tax facts and topics. Comprehensive overview of the OECD BEPS project, including daily BEPS news, countries` adoption of BEPS measures and an overview of the 15 BEPS actions. South Africa takes further steps to open up electricity market According to the South African Ministry of Finance, the main reason for the renegotiation of the treaty was to «curb abuses» of the old treaty. The new treaty was signed by both countries on 17 May 2013 and ratified by the South African Parliament on 14 September 2013, but Mauritius did not inform South Africa of the ratification of the new treaty until 28 May 2015. The new contract will apply from 1 January 2016. Corporate tax rates, mark-ups and effective tax rates for the current year, as well as historical and approved future rates. Customizable report on certified rates with updated corporate tax and withholding tax rates at the end of each month for more than 100 countries. Customizable calendar tool that tracks corporate income tax, VAT, and transfer pricing obligations by country or business. The treaty contains the provision that a permanent establishment is considered to be constituted if an enterprise of a Contracting State provides services in a Contracting State by employees or other employees for the same or a related project for one or more periods totalling more than 183 days in a period of 12 months.

Global exchange rates, including average tax year exchange rates and spot rates for all reporting currencies. Profits from the sale of other assets by assets resident in a Contracting State may be taxed only by that State. .