Hong Kong Double Taxation Agreements and Tax Information Exchange Agreements
As an international trading and financial centre, Hong Kong double taxation agreements (‘DTAs’) with its trading partners are essential to provide investors certainty in respect of taxing rights and incentives for carrying on business in Hong Kong.
The DTA network also stimulates the development of a mutual economy, prevents discrimination and double taxation. Apart from DTAs, Hong Kong has entered into Tax Information Exchange Agreements (‘TIEAs’) with other tax jurisdictions for the purpose of combating tax evasion. The current status of Hong Kong DTAs and TIEAs is summarised as follows:
Current Hong Kong Double Taxation Agreements
Hong Kong has DTAs in force with the following 45 tax jurisdictions:
| (1) | Austria | (16) | Ireland | (31) | New Zealand |
| (2) | Belarus | (17) | Italy | (32) | Pakistan |
| (3) | Belgium | (18) | Japan | (33) | Portugal |
| (4) | Brunei | (19) | Jersey | (34) | Qatar |
| (5) | Cambodia | (20) | Korea | (35) | Romania |
| (6) | Canada | (21) | Kuwait | (36) | Russia |
| (7) | Czech | (22) | Latvia | (37) | Saudi Arabia |
| (8) | Estonia | (23) | Liechtenstein | (38) | Serbia |
| (9) | Finland | (24) | Luxembourg | (39) | South Africa |
| (10) | France | (25) | Macao | (40) | Spain |
| (11) | Georgia | (26) | Mainland China | (41) | Switzerland |
| (12) | Guernsey | (27) | Malaysia | (42) | Thailand |
| (13) | Hungary | (28) | Malta | (43) | United Arab Emirates |
| (14) | India | (29) | Mexico | (44) | United Kingdom |
| (15) | Indonesia | (30) | Netherlands | (45) | Vietnam |
Please note that Hong Kong has further signed DTAs with South Africa, the United Arab Emirates, Italy and Korea. The orders of implementation of the DTAs with South Africa and the United Arab Emirates have been gazetted on 15 May 2015, which will be effective after passing local legislation and completing the ratification procedures.
Potential Hong Kong Double Taxation Agreements
Furthermore, Hong Kong is actively negotiating DTAs with the following 14 tax jurisdictions:
| (1) | Bahrain | (6) | Lithuania | (11) | Norway |
| (2) | Bangladesh | (7) | Maldives | (12) | Turkey |
| (3) | Cyprus | (8) | Mauritius | (13) | Ukraine |
| (4) | Germany | (9) | Nigeria | ||
| (5) | Israel | (10) | North Macedonia |
Tax Information Exchange Agreements
Currently, Hong Kong has seven TIEA in force with the United States, Denmark, the Faroe Islands, Greenland, Iceland, Norway and Sweden respectively.
Automatic exchange of information
The relevant legislative amendments for the automatic exchange of information ‘(AEOI’) implementation in Hong Kong have been enacted into laws on 22 June 2016. Under the AEOI legislations, financial institutions are required to identify financial accounts held by tax residents of reportable jurisdictions or held by passive non-financial entities whose controlling persons are tax residents of reportable jurisdictions in accordance with due diligence procedures.
Required information of these accounts (including name, tax identification number, account balance, amount of passive income etc. ) has to be collected and furnished to the Inland Revenue Department (“IRD”) annually.
The IRD will conduct AEOI with reportable jurisdictions provided that an arrangement is in place with the reportable jurisdiction concerned to provide the basis for exchange. Currently, the number of Hong Kong’s reportable jurisdictions is 126. The first exchange of information took place in 2018 in respect of the financial account information for 2017.
