On 22 June 2018, Ghana’s parliament approved the ratification of the pending income and capital tax treaty with Mauritius which was signed on 11 March 2017, and which is the first of its kind between the two countries. Based on information released by the Mauritius Revenue Authority, we understand that the treaty became in force on 22 January 2019 and applies as from 1 January 2020.
Purpose of the treaty
The Double Taxation Avoidance Agreement (DTAA) has for main objective to avoid and discharge double taxation of the same income in the two countries. At the same time, both countries have also set up a permanent joint commission on bilateral cooperation as part of the measures which will ease trade between them and consolidate trade interests.
Double Taxation Relief
Both Mauritius and Ghana apply the credit method for the elimination of double taxation. In respect to dividends received by a Mauritius resident company which owns at least 5% of the capital of the paying company, Mauritius will also provide a credit for the tax payable in Ghana in respect to the profits out of which such dividend is paid. In the same way, Ghana shall also provide a credit with respect to dividends paid by a Mauritius company when received by a Ghana resident company that owns at least 10% of the paying company’s capital.
Withholding Tax Rates
- Dividends – 7%
- Interest – 7%, with an exemption where the payer or the recipient of the interest is the government of a Contracting State, a public body, a political subdivision or local authority thereof, or the central bank of a Contracting State, or the interest is paid in connection with a loan granted, approved, guaranteed or insured by the government of a Contracting State, etc.
- Royalties – 8%
- Technical Service Fees (managerial, technical, or consultancy) – 10%
Capital Gains
The following capital gains derived by a resident of one Contracting State may be taxed by the other Party:
- Gains from the alienation of immovable property situated in the other State; and
- Gains from the alienation of movable property forming part of the business property of a permanent establishment in the other State.
Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.
The new treaty will aim at providing a platform to give self-assurance to investors both in Ghana and Mauritius to effect investments in both countries without being taxed twice by the respective governments. The treaty also intend to encourage and enhance trade, investments and cooperation within the African continent.