Hong Kong Fact-File Part 3:
Individual Business International Taxation

3.3 Hong Kong Double Tax Treaties

Double tax treaties

Double tax treaties (DTTs, or DTAs) are designed to prevent the same income from being taxed twice in situations where the authorities of two different countries have equal taxation claims on it, although due to the territorial nature of Hong Kong’s tax system, this is not often an issue for Hong Kong based individuals and businesses.

However, Hong Kong has a number of limited double tax treaties in place relating to air transport and shipping activities.

As the tax system is completely independent from that in place in China, Hong Kong is not included in any tax treaties signed by the mainland.

Hong Kong and China have a memorandum of understanding which exempts Chinese sourced income by Hong Kong based shipping, aviation and transport operations from tax on the mainland. Furthermore, Hong Kong enterprises are only subject to tax in China if they have a permanent establishment there and Hong Kong residents are only subject to taxation for services they provide in China unless their residence on the mainland is more than 183 days per tax year. Hong Kong will give tax credits for any taxes paid in China.

Hong Kong and Belgium signed the first comprehensive treaty in 2004. The treaty includes provision for double taxation and prevention of fiscal evasion.

Other comprehensive agreements have subsequently been signed with:

- Luxembourg (Avoidance of double taxation on Income and Capital and Prevention of Fiscal Evasion) 2009

- Vietnam (Double taxation relief and prevention of fiscal evasion with respect to taxes on income) 2009

- Thailand (Double taxation relief and prevention of fiscal evasion with respect to taxes on income) 2005

Treaties with Brunei, Indonesia, Netherlands are not yet in effect.