UK- Hong Kong Tax agreement
The first comprehensive Double Taxation Agreement (DTA) between the UK and Hong Kong was recently signed in London by the UK’s Exchequer Secretary to the Treasury and Hong Kong’s Secretary of Financial Services and the Treasury.
The DTA has been drafted along the lines of the OECD Model Double Taxation Convention. Some of the main features of the DTA include:
- The latest OECD provision on exchange of information, but limited to taxes covered by the DTA;
- Zero rate of withholding tax on dividends (except for REITs) and 3% on royalties;
- Zero rate of withholding tax on interest but with a provision to ensure the benefits of the interest article can only flow to residents of the other state.
The DTA will take force once both countries have finalised the legislative procedures. The provisions will then take effect from the calendar year following its entry into force.