Hong Kong’s Inland Revenue Authority on November 24 announced that tax treaties signed with Latvia and Pakistan have entered into force. Both treaties will enter into effect in Hong Kong for tax years beginning after April 2018, the government reported.
Hong Kong’s tax treaty with Latvia, signed April 2016, reduces withholding tax rates on dividends and interest to zero if the beneficial owner of the payment is a company, and to 10 percent in other cases. Listed government organizations are exempt from withholding. Withholding taxes on royalties are reduced to zero if the beneficial is a company and three percent in other cases.
The treaty with Pakistan was signed February 2017. It reduces the Pakistani withholding tax rate on Hong Kong residents on royalties to zero and on fees for technical services to 12.5 percent. Further, Pakistan’s withholding tax rate on dividends and interest is reduced to 10 percent. Special rules are provided for taxing Hong Kong airline and international shipping transport profits, and the treaty also includes provisions on exchange of information.
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