By Vlad Cuc, specialist in company formation matters
The avoidance of double taxation
Hong Kong and Canada have concluded a double tax treaty with the purpose of avoiding double taxation and fiscal evasion. It applies to residents of one or both countries who are doing business in the other jurisdiction. The treaty establishes which country can impose taxes on income so that individuals and companies may not be taxed twice on the same revenue.
Hong Kong has signed a number of other double tax treaties
. These agreements are helpful for encouraging foreign investments and strengthening the economic relations with other countries.
Taxes covered by the Hong Kong – Canada DTA
The taxes covered by the double tax agreement (DTA) between the two jurisdictions concern all those on income levied by one country or the other and any others imposed in place of or in addition to the ones stated in the treaty, after its signature date.
In case of Hong Kong the double tax treaty applies for:
- the personal income tax and the property tax.
In case of Canada the DTA applies for those taxes imposed by the Canadian Government under the Income Tax Act.
Advantages for foreign investors in Hong Kong
The double taxation agreement between Hong Kong and Canada offers preferential withholding tax rates. The withholding tax rate for dividends is 5% if the company receiving the payment controls a minimum percentage of the company paying the dividends. In all other cases the rate is 15%.
The types of income covered by the treaty
include that from immovable property, business profits
, income from employment
or as director’s fees
and income for entertainers and sports persons.
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