By Vlad Cuc, specialist in company formation matters
Avoid double taxation in Hong Kong
Hong Kong has a double taxation relief policy, meaning that double taxation will not arise when two different tax jurisdictions overlap. This allows companies that have multiple headquarters to avoid taxation in all the countries where they produce profit.
Hong Kong has a territorial taxation
and only the profit/income produced in Hong Kong
is subject to the applicable taxation principles. In most cases, company income from sources other than Hong Kong is not taxed.
Double taxation agreements in Hong Kong
The Hong Kong Special Administrative Region Government concluded several comprehensive double taxation agreements/arrangements with Hong Kong’s trading partners. DTAs or tax treaties prevent double taxation and fiscal evasion. They are also an important tool for increasing the cooperation between Hong Kong and other international tax administrations. A DTA produces effects for resident Hong Kong companies and companies resident in a jurisdiction where a DTA is in force.
A double taxation agreement
is useful for foreign investors not only because it allows for taxes to be paid only once, but also because they can assess their tax liabilities according to the type of activity they perform in Hong Kong
and other partner countries. Branches
and subsidiaries in Hong Kong
also benefit from these agreements.
Double taxation agreements concluded by Hong Kong
Hong Kong has signed 30 double tax agreements and negotiations are being held to sign even more agreements with other countries. The concluded comprehensive double taxation agreements are with: Austria, Belgium, Brunei, Canada, the Czech Republic, France, Guernsey, Hungary, Indonesia, Ireland, Italy, Japan, Jersey, Korea, Kuwait, Liechtenstein, Luxembourg, Mainland China, Malaysia, Malta, Mexico, the Netherlands, Portugal, Qatar, South Africa, Spain, Switzerland, Thailand, the United Kingdom, Vietnam (pending).
Negotiations are in progress with countries like Germany, Finland, Romania, Russia, the United Arab Emirates and others.