The Hong Kong government on December 27 announced that new tax treaties with Cambodia and Estonia entered into force on December 27 and 18, 2019, respectively.
The Hong Kong-Cambodia tax treaty was signed in June. It reduces withholding tax rates on interest, royalties, and fees for technical services from 14 percent to 10 percent. It also provides rules for taxation of airlines and shippers operating in the two countries, the Hong Kong government said.
The Hong Kong-Estonia tax treaty was signed in September. Under the treaty, any Estonian tax paid by Hong Kong residents in respect of income derived from sources in Estonia will be allowed as a credit against the Hong Kong tax payable on the same income, subject to the provisions of the tax laws of Hong Kong, the government said.
Similarly, for Estonian residents, double taxation will be avoided by way of exemption of the income taxed in Hong Kong from the Estonian tax, or deduction of Hong Kong tax paid from the Estonian tax in respect of the same income.
The treaty also caps Estonia’s withholding tax rate for Hong Kong residents on royalties at 5 percent. The current withholding tax rate is 10 percent;
Further, Hong Kong airlines operating flights to and from Estonia will be taxed at Hong Kong’s profits tax rate, and will not be taxed in Estonia.
Also, profits from international shipping transport earned by Hong Kong residents arising in Estonia will not be taxed in Estonia.
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