Hong Kong and South Africa have signed an agreement, on 17 October 2014, for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income. This agreement sets out clearly the allocation of taxing rights between the two jurisdictions and thus will help investors better assess their potential tax liabilities from cross-border economic activities.
According to the agreement, South Africa’s withholding tax on royalties, currently at 15 per cent, will be capped at 5 per cent. South Africa’s dividend withholding tax on Hong Kong residents will be reduced from the current rate of 15 per cent to 10 per cent or 5 per cent, depending on the percentage of their shareholdings. South Africa’s interest withholding tax on Hong Kong residents will be capped at 10 per cent.
