Mauritius and the Republic of Angola have executed a double taxation avoidance agreement (DTAA) which was published in the gazette of Mauritius on 30 August 2022. The agreement will come into effect on the date that Mauritius receives notification of the completion of the procedures under the domestic laws of Angola and Mauritius.
This new DTAA is expected to boost investments from Mauritius to Angola particularly as Angola has only two DTAAs in force (Portugal and UAE).
The Economic Development Board(EDB) of Mauritius has stated that the DTAA will:
(a) provide tax certainty to investors of the two countries in their dealings with Mauritius or Angola, as the case may be;
(b) provide mechanisms to – (i) combat tax evasion and other malpractices through collaboration between the two authorities in terms of exchange of information and lending assistance to each other for the collection of tax due to the concerned tax authority; and (ii) resolve tax disputes that may arise, through a mutual agreement procedure; and
(c) create a conducive environment for greater investment flows from the Mauritian global business sector to Angola, by providing tax incentives.
Click here to view the announcement from the EDB.
Key features of the DTAA agreement are:
The limit on the withholding tax is 5% of the gross dividend if the beneficial owner of the dividend is a company that holds directly at least 15% of the capital of the company paying the dividend over a 365-day period (including the day that the dividend is paid)
If the shareholder is the beneficial owner of the dividend, the withholding tax is limited to 8% of the gross dividend
The withholding tax is limited to 8% of the gross interest if the recipient is the beneficial owner.
The withholding tax is limited to 7% if the recipient is the beneficial owner of the royalties.
The withholding tax on technical fees is limited to 5% of the gross fees where the recipient is the beneficial owner of the technical service fee.
The right to tax capital gains on the sale of shares is given to the resident state.
Elimination of double taxation
The DTAA relieves any double taxation through the credit system. A tax sparing credit is available where any exemption or reduction is the result of the promotion of economic development.
Principal Purpose Test (PPT)
A Principal Purpose Test (PPT) is also included in the DTAA which is in line with OECD BEPS to prevent treaty abuse.