In addition, there is a double taxation agreement between Hong Kong and Saudi Arabia, which is currently pending. There is also a Memorandum of Understanding with China that, as part of the agreement, Hong Kong citizens who receive dividends from New Zealand that are not due to an institution in New Zealand are subject to a reduced withholding rate of 15%. The withholding rate is further lowered to 5% or 0% for eligible beneficiaries. Hong Kongers who receive royalties from New Zealand pay a withholding tax capped at 5%. Governments have recognized that this would be unfair and discourage international trade/business. As a result, they each put in place their own rules to prevent the same income from being taxed twice. In some cases, the amount of tax paid in one country can be deducted from what is due in another country. These agreements or contracts are called Double Tax Agreements (DBA) and should be integrated into your tax planning system. In August 2006, the Chinese and Hong Kong authorities signed an agreement to avoid double taxation, which aims to guarantee tax debt and tax savings to investors and taxpayers in both localities. It is much more common to seek the services of a qualified and experienced accountant to seek tax breaks through double taxation agreements. Fees vary depending on the complexity of an individual`s personal life, in almost all cases, the tax savings far exceed all the costs of using an accountant – and they can be sure to pay the correct amount of tax with total confidence.
In September 2012, the Commissioner for Finance stated that Hong Kong had made “remarkable progress” in establishing its international network of tax treaties since the change in the internal income system in March 2010, and that since then the network of tax treaties in Hong Kong has rapidly expanded. As of March 2018, 37 global double taxation agreements were in force in Hong Kong. The table below shows countries that have entered into a double taxation agreement with the United Kingdom (as of October 23, 2018). On the UK government`s website, you will find an updated list of active and historic double taxation conventions. If a person is considered non-resident in the United Kingdom under double taxation agreements, that person would only be taxable in the United Kingdom if the income comes from activities in the United Kingdom. This is important because it means that all non-UK income and investment profits are protected from UK tax. That`s why we offer a first free consultation with a qualified accountant that will give you answers to your questions and help you understand if a double taxation agreement could apply to you and help you save huge amounts of unnecessary taxes. Under the Convention, Switzerland is exempt from double taxation. In addition, the withholding rate at source has been reduced to 10%. In addition, under the DBA, Hong Kong airlines flying to Brunei are taxed at the Hong Kong corporate tax rate (which is lower than Brunei`s).
Profits from international shipping made by Hong Kong residents but made in Brunei, which are currently taxable in Brunei, will be tax-exempt under the agreement.