Hong Kong has already entered into Comprehensive Double Taxation Agreement (“CDTA”) with more than 40 tax jurisdictions. The most commonly used one would definitely be the CDTA with the PRC.
However, not every Hong Kong company is a Hong Kong tax resident. The definition of tax resident in Hong Kong is as follows:-
Corporation
The management and control of the corporation is exercised in Hong Kong.
Individual
Under the CDTA between Hong Kong and the PRC:
Withholding tax | Without DTA | With DTA |
|---|---|---|
Dividends | 10% | 5% |
Interest | 10% | 7% |
Royalties | 10% | 5% / 7% |
To mitigate potential cross-border tax risks and enjoy treaty benefits with other tax jurisdictions, demand for application of Hong Kong tax resident certificate has gradually been increasing. We believe alignment of commercial substance and planning enable taxpayers to apply the certificate successfully.
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