On 7 November 2022, the government of the Hong Kong Special Administrative Region of the People's Republic of China (Hong Kong) announced that it signed a comprehensive avoidance of double taxation agreement (CDTA) with the government of Mauritius. The CDTA will come into force after the completion of ratification procedures by both jurisdictions.
Under the CDTA, Hong Kong companies will avoid double taxation on income by allowing those companies a credit from Hong Kong against income tax payable in Hong Kong on the same income for which income tax was paid in Mauritius.
With respect to Hong Kong residents, the CDTA applies to the profits tax, salaries tax, and property tax, regardless of whether the tax is charged under personal assessment. The agreement caps withholding rates on interest and royalties for Hong Kong residents at no more than 5%. Also, profits from international shipping transport earned by Hong Kong residents will not be taxed by Mauritius.
The complete Hong Kong-Mauritius CDTA is on the Hong Kong Inland Revenue Department (IRD) website. Information about the other tax treaties to which Hong Kong is a party can also be found on the IRD website. The government of Mauritius maintains information about its tax treaties on the Mauritius Revenue Authority website.
Edward Kowalski, Esq., is Manager, Payroll Information Resources, for the American Payroll Association