Hong Kong on May 15 announced that orders were gazetted to implement tax treaties signed with South Africa and the United Arab Emirates and notes exchanged with Japan regarding interpretation of the 2010 Japan/Hong Kong treaty.
The tax treaty with South Africa, signed October 2014, reduces withholding tax on dividends derived by Hong Kong residents in South Africa from 15 percent to 10 percent. The withholding tax rate is further reduced to 5 percent if the beneficial owner is a company which holds directly at least 10 percent of the capital of the company paying the dividends.
Withholding tax on interest derived by Hong Kong residents in South Africa is reduced from 15 percent to 10 percent (or to zero in the case of a governmental institution), and the withholding tax on royalties is reduced from 15 percent to 5 percent.
The tax treaty with the UAE, signed October 2014, contains provisions for the avoidance of double tax and an article on exchange of information relating to taxes.
The exchange of notes with Japan occurred December 2014. The notes would expand the coverage of the tax types subject to exchange of information to include the Japanese inheritance tax, gift tax, consumption tax, and any similar taxes later imposed.
The orders will be tabled at Hong Kong’s Legislative Council on May 20 for negative vetting.
The treaties and notes exchanged will enter into force after both Hong Kong and the treaty partners have completed their ratification procedures.
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