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Hong Kong Double Taxation Agreements

Hong Kong Double Taxation Agreements

Double taxation arises when two or more tax jurisdictions overlap, such that the same item of income or profit is subject to tax in each.

  • Hong Kong adopts the territoriality basis of taxation. That means only income / profit sourced in Hong Kong is subject to tax and that derived from a source outside Hong Kong by a local resident is in most cases not taxed in Hong Kong.
  • Various countries which tax their residents on a worldwide basis provide their residents operating businesses in Hong Kong with unilateral tax credit relief for any Hong Kong tax paid on income / profit derived from Hong Kong.
  • Hong Kong allows a deduction for foreign tax paid on turnover basis in respect of an income which is also subject to tax in Hong Kong. Businesses operating in Hong Kong therefore do not generally have problems with double taxation of income.
  • Hong Kong Special Administrative Region Government (HKSARG) has been concluding double taxation agreements (DTAs) trading partners.
  • These DTAs provide certainty to investors on the taxing rights of the contracting parties; helps investors to better assess their potential tax liabilities on economic activities; and provides an added incentive for overseas companies to do business in Hong Kong, and likewise, for Hong Kong companies to do business overseas.

Concluded Double Taxation Agreements:

  • Austria
  • Belgium
  • Brunei
  • Canada
  • Czech
  • France
  • Hungary
  • Indonesia
  • Ireland
  • Japan
  • Jersey
  • Kuwait
  • Lichtenstein
  • Luxembourg
  • Mainland of China
  • Malaysia
  • Malta
  • Mexico
  • Netherlands
  • New Zealand
  • Portugal
  • Spain
  • Switzerland
  • Thailand
  • United Kingdom
  • Vietnam

Negotiations of DTAs in progress:

  • Bangladesh
  • Bahrain
  • Finnland
  • Guernsey
  • India
  • Italy
  • South Korea
  • Macao SAR
  • Qatar
  • Saudi Arabia
  • South Africa
  • United Arab Emirates

[source: Hong Kong Inland Revenue Department]