Hong Kong – Double Taxation Treaties

Until June 2001 Hong Kong had no comprehensive double taxation treaties in place. This was due to the territorial tax system that operates whereby only income / profit sourced in Hong Kong is subject is subject to tax. Income derived from outside Hong Kong is not taxed in Hong Kong. This principle therefore negates the need for double taxation treaties.
The Hong Kong Special Administrative Region Government however does recognize that there are merits in concluding double taxation agreements as it will provide advantages such as a greater certainty to investors on taxing rights, help investors to assess potential tax liabilities on certain economic activities and provide an incentive for overseas companies to do business in Hong Kong. In April 2010 the Commissioner of Inland Revenue of Hong Kong stated that the territory had entered into a new phase and would be actively be pursuing agreeing double taxation agreements with a number of countries. Under Article 151 of the Basic Law the territory can negotiate its own double taxation treaties independently from China as Hong Kong has the right to maintain an independent taxation system free from interference from the mainland until 2047.

Double Taxation Agreements are currently in force between Hong Kong and the following countries:

In March 2010 Hong Kong signed treaties with Brunei, the Netherlands and Indonesia.

Double Taxation Agreements between Hong Kong and the following countries await ratification: Austria, Hungary, Ireland, Kuwait and the UK.

If you would like additional information on Hong Kong Double Taxation Agreements please contact us.