Hong Kong signs tax treaty with Estonia

The Hong Kong government today announced that Hong Kong and Estonia have signed a comprehensive tax treaty.

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.

Further steps must be taken by both countries for the new Estonia-Hong Kong tax treaty to enter into force