Double Taxation Treaties

Hong Kong has no double tax agreement with any country. As Hong Kong taxation is based on a territorial principle, income of a local company derived from outside Hong Kong, will be not liable to double taxation in Hong Kong. Many countries which tax their residents on a worldwide basis also provide their companies operating in Hong Kong with tax credit for HK profits tax. Withholding tax, which currently makes 5,25%, may be imposed only on royalties paid to non-resident recipient not related to the payer. If the parties are related, then a tax rate of 17.5% will be applicable.

For all the above-mentioned reasons, businesses operating in Hong Kong do not generally have problems with double taxation of income. Other double tax agreements are with China, regarding Personal and Corporate Income Tax, and limited treaties with the other countries, including USA, which are connected only with the matters of shipping and aviation.