– New double taxation agreement with Cambodia
Hong Kong has signed a comprehensive double taxation agreement (CDTA) with Cambodia on 26 June 2019. This brings the number of CDTAs Hong Kong has concluded with other jurisdictions to 41, out of which 37 are effective and the remaining 4 (i.e. Saudi Arabia, India, Finland and Cambodia) will become effective after all relevant ratification procedures are completed. It is expected that Hong Kong will sign more and more CDTAs with other jurisdictions. There are 14 CDTAs under negotiation between Hong Kong and the following jurisdictions:
- Bahrain, Bangladesh, Cyprus, Estonia, Germany, Israel, Macau SAR, Maldives, Mauritius, Nigeria, North Macedonia, Norway, Serbia and Turkey
The ratification procedures of the CDTA between Hong Kong and Cambodia are in progress and the effective date of the CDTA is still pending.
The following table provides a comparison of withholding tax rates on certain incomes received by a Hong Kong resident (qualified as beneficial owner) from Cambodia:
|Passive incomes||CDTA rates||Domestic rates (Cambodia)|
|Technical service fee||10%||14%|
“Technical service fee” per above table refers to considerations for the rendering of any managerial, technical or consultancy services, including the provision of technical services.
Also, according to the CDTA between Hong Kong and Cambodia, if a Hong Kong resident derives capital gains on the transfer of shares in a Cambodian company (such shares do not derive more than 50 per cent of their value directly or indirectly from immovable property situated in Cambodia), the taxing right on such capital gains should rests with Hong Kong and Hong Kong does not tax “capital” gains.
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