Hong Kong and Finland’s governments signed a comprehensive tax treaty on May 24.
The agreement, which is not yet in force, was signed in Finland, Hong Kong’s Inland Revenue Department said.
Under the treaty, Finland’s withholding tax rates for Hong Kong residents on dividends, currently set at 20 percent for companies and 30 percent for individuals, would be capped at 5 percent if the beneficial owner is a company that controls at least 10 percent of the voting power in the company paying the dividend and would be 10 percent in other cases.
The withholding tax rate for royalties under the treaty would be 3 percent.
The treaty also provides special tax benefits for Hong Kong airlines operating flights to Finland, which would be taxed at Hong Kong’s corporation tax rate and would not be taxed in Finland.
Further, under the treaty, profits from international shipping transport earned by Hong Kong residents arising in Finland will be exempt from tax in Finland.
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