Hong Kong expands its tax treaty network adding a double taxation treaty with Saudi Arabia. The agreement will enter into force once both jurisdictions submit their ratification and will be beneficial for foreign investors in Hong Kong from Saudi Arabia and vice versa. One of our lawyers in Hong Kong can provide you with additional details on how this agreement can help you with taxation matters if you are an investor from Saudi Arabia.
Hong Kong – Saudi Arabia DTA
The double tax treaty (DTA) signed between Hong Kong and Saudi Arabia applies to the taxes levied on income by both jurisdictions. The agreement clarifies the right to levy these taxes when individuals derive income from both jurisdictions. Thus, branches in Hong Kong will only be taxed once, for examples.
Hong Kong companies
in Saudi Arabia will be able to use the taxes they pay for their income in that jurisdiction as a credit against the same tax that has to be paid in Hong Kong, where they are tax residents. The same applies to Saudi Arabian companies in Hong Kong.
The agreement for the avoidance of double taxation also serve another purpose: it caps he withholding taxes on dividends to a value of five percent and on royalties at five percent or eight percent. the reduced five percent rate for royalties will apply to those paid for using commercial, scientific or industrial equipment. One of our lawyers in Hong Kong
can give you more details on how the reduction will apply.
Double tax treaties in Hong Kong
Cross-border investments are facilitated through the double tax treaties
signed between one jurisdiction and another. Hong Kong has signed more than 30 such treaties that allow for protection against double taxation.
DTAs help investors in Hong Kong limit their tax liabilities in their country of origin, by paying tax only once on the income they derive from the Special Administrative Region.