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The UK has secured a first-time comprehensive double taxation agreement (DTA) with the Hong Kong Special Administrative Region of the People’s Republic of China.
The accord was signed in London by David Gauke MP, Exchequer Secretary to the Treasury and Professor KC Chan, Hong Kong Secretary of Financial Services and the Treasury.
It generally follows the Organisation for Economic Co-operation and Development (OECD) Model Double Taxation Convention, with notable features including:
- the latest OECD provision on exchange of information, but limited to taxes covered by the agreement;
- zero rate of withholding tax on dividends (except for real estate investment trusts) and 3% on royalties; and
- zero rate of withholding tax on interest but with a provision to ensure the benefits of the interest article can only flow to residents of the other state.
The text of the DTA is available on HMRC’s website. It will be published by the Stationery Office as soon as it is presented to Parliament for approval.
The agreement will enter into force once both countries have completed their legislative procedures, with provisions taking effect from the next calendar year.
