The agreement which was signed in October 2014 has now been ratified by both parties and entered onto force on the 20th October 2015. It applies in South Africa from 1 January 2016 and in Hong Kong from 1 April 2016.
This is Hong Kong’s first Double Tax Treaty with an African jurisdiction. It is hoped that the agreement will give investors greater certainty regarding tax liabilities when activities are involved between the two countries.
Apart from the avoidance of paying tax on income in both countries other important aspects of the treaty include:-
– Withholding taxes on dividends are reduced to 5% with requisite shareholding and capped at 10% in all other cases
– No Capital Gains Tax on sale of shares in a property holding company with less than 50% interest in property
The treaty is being especially welcomed due to the continuing investment into Africa by China, which may benefit greatly from this.