HK signs DTA with India

On March 19, Hong Kong and India signed an agreement aimed at avoiding double taxation and limiting withholding tax rates on passive income at source.

The newly-signed double tax agreement (DTA) caps withholding tax on dividends at 5%, and withholding tax on royalty and interest income to 10%. In the absence ofBefore the DTA, interest income sourced from India is subject to a 20% tax rate.

Under the DTA, Hong Kong airlines operating flights to India will be taxed at Hong Kong’s corporation tax rate, and will not be taxed in India. Profits from international shipping transport earned by Hong Kong residents arising in India and subject to tax there will enjoy 50% reduction in tax in India. The agreement provides that any Indian tax paid by Hong Kong companies will be allowed as a credit against the tax payable in Hong Kong on the same profits, subject to the provisions of the tax laws of the jurisdiction. Likewise, for Indian companies, the tax paid in Hong Kong will be allowed as a deduction from the tax payable on the same income in India.

Also, the agreement includes provisions for the exchange of tax information.

Filed under: Business and Economy, HK as a Financial Centre, Offshore Legislation, Taxation

HK launches CbC Reporting Portal

On March 5, a new Country-by-Country Reporting Portal was launched by Hong Kong’s Inland Revenue Department.

Groups can now register to file CbC reports for accounting periods beginning between January 1, 2016, and December 31, 2017, using the online portal.

The CbC report is one element of a new 3-tiered standardized approach to transfer pricing documentation, as proposed in Action 13 of the OECD’s base erosion and profit shifting (BEPS) project.

CbC reporting requires multinational enterprises to provide aggregate information on an annual basis, in each jurisdiction where they do business, relating to the global allocation of income and taxes paid, together with other indicators of the location of economic activity within the MNE group. The reporting covers information about which entities do business in a particular jurisdiction and the business activities each entity engages in.

The requirement for filing a CbC report in Hong Kong applies to the parent entity of MNE groups whose annual consolidated group revenues exceeds HKD 6.8 billion (USD 868.3 million), and in exceptional circumstances surrogate entities of the group.

Filed under: Business and Economy, International Business Environment

HK is the world’s 21st visa-free passport

Hong Kong passport holders have visa-free access to 155 countries. According to the latest edition of the Henley Passport Index, the jurisdiction takes the 21st place in the list of the world’s most powerful passports.

Germany holds the world’s most powerful passport for the 5th year in a row as its holders enjoying visa-free access to 177 countries. It is followed by Singapore as its passport holders enjoy visa-free access to 176 countries.

The Henley Passport Index is an authoritative passport index which derives exclusive data from the International Air Transport Association.

Filed under: Business and Economy, International Business Environment, Travel