HK’s DTA with South Korea came into effect

The comprehensive double taxation agreement (DTA) between Hong Kong and South Korea went into effect on September 27, 2016.

Signed on July 8, 2014, the agreement sets out the allocation of taxing rights between Hong Kong and South Korea, so that investors should be able to better assess their potential tax liabilities from cross-border economic activities, and is intended to offer added incentives for South Korean companies to do business or invest in Hong Kong, and vice versa.

Currently, Hong Kong residents receiving interest from South Korea are subject to South Korea’s withholding tax, which ranges from 14% to 20%. Under the new agreement, such withholding tax will be 10%.

The South Korean withholding tax on royalties, currently at 20%, will also be 10%, and the South Korean dividends withholding tax on Hong Kong residents will be reduced from the present rate of 20% to 15% or 10%, depending on the percentage of their shareholdings.

Filed under: Uncategorized

HK is World’s Freest Economy Again

Hong Kong has welcomed its retention of the Fraser Institute’s annual ranking as the world’s freest economy, due in part to its commitment to low taxation.

Now it is the 22nd time the jurisdiction becomes the world’s freest economy.

Out of 159 countries and territories, Hong Kong and Singapore again occupy the top two positions in the Institute’s annual Economic Freedom of the World report. The other nations in the top 10 are New Zealand, Switzerland, Canada, Georgia, Ireland, Mauritius, the UAE, and Australia and the UK.

Filed under: HK as a Financial Centre, International Business Environment, Uncategorized

HKMA urges banks to ease requirements on startup account openings

On September 8, Hong Kong’s banking regulator urged financial firms to review requirements that have made it virtually impossible for startups and small companies to open bank accounts in Hong Kong.

Opening bank accounts has been one of the key issues holding back the development of financial technology companies in Hong Kong as it competes with Singapore, Australia and China to lure investments in the sector.
The Hong Kong Monetary Authority (HKMA) launched a regulatory regime known as a “sandbox” for innovation in the banking sector, amid fears the city is losing ground to other markets.

The measures are not aimed at helping facilitate the account openings of financial technology companies specifically, but to “make sure banks do not lean against anyone in particular.”

In a circular to banks, the regulator said that combatting money laundering and terrorist financing were important, but banks are advised to “refrain from adopting practices that would result in financial exclusion.”

Some 20 banks out of the more than 150 under the HKMA’s supervision have volunteered to be put on a list welcoming accounts from startups and small-and-medium enterprises (SMEs).

Filed under: Banking Services, Financial Services, HK as a Financial Centre