The governments of Hong Kong and India signed a comprehensive tax agreement on March 19, Hong Kong’s government has announced.
Under the agreement, double taxation will be avoided because Indian tax paid by Hong Kong companies will be allowed as a credit against the tax payable in Hong Kong on the same profits, subject to the provisions of the tax laws of Hong Kong. For Indian companies, tax paid in Hong Kong will be allowed as a deduction from the tax payable on the same income in India.
The agreement provides that India’s withholding tax rate for Hong Kong residents on interest will be capped at 10 percent. Withholding tax on dividends is capped at 5 percent, withholding tax on royalties is capped at 10 percent, and withholding tax on fees for technical services is capped at 10 percent of the gross amount of the fees.
Hong Kong Financial Secretary, Paul Chan, who signed the agreement on behalf of Hong Kong, said that Hong Kong has treasured its economic and trade connections with India and that he was certain that relations between the countries will be enhanced. This is the 39th tax agreement signed by Hong Kong, he said.
The agreement was signed on behalf of India by Ambassador of India to China, Gautam Bambawale.
Additional steps must be taken by the two countries for the agreement to enter into force and effect.
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