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Hong Kong has signed comprehensive double taxation agreement (CDTA) with Macao SAR and Estonia on 25 November 2019 and 25 September 2019 respectively. This brings the number of CDTAs Hong Kong has concluded with other jurisdictions to 43, out of which 40 are effective and the remaining 3 (i.e. Cambodia, Estonia and Macao SAR) 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 13 CDTAs under negotiation between Hong Kong and Bahrain, Bangladesh, Cyprus, Georgia, Germany, Israel, Maldives, Mauritius, Nigeria, North Macedonia, Norway, Serbia and Turkey.

The following tables provide a comparison of withholding tax rates on certain incomes received by a Hong Kong resident (qualified as beneficial owner) from Macao SAR and Estonia:

Passive incomes CDTA rates Domestic rates
(Macao SAR)
Domestic rates
(Hong Kong SAR)
Dividends 5% 0% 0%
Interest 5% 0% 0%
Royalties 3% 0% 4.95% (Note 1) /
16.5% (Note 2)

 

Passive incomes CDTA rates Domestic rates
(Estonia)
Domestic rates
(Hong Kong SAR)
Dividends 0%/10% (Note 3) 0% 0%
Interest 0%/10% (Note 3) 0% 0%
Royalties 5% 10% 4.95% (Note 1) /
16.5% (Note 2)

 

Notes:

  1. Under the two-tier tax rates regime, 2.475% for the first HK$2 million assessable profits and 4.95% for the remaining amount.  Such rates generally do not apply to royalties paid to a related party unless the intellectual property has never been owned in whole or in part by a person carrying on a business in Hong Kong
  2. Under the two-tier tax rates regime, 8.25% for the first HK$2 million assessable profits and 16.5 % for the remaining amount.
  3. 0% if the beneficial owner is a company; 10% in all other cases.   

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