Double Tax Pact between Hong Kong and Mexico

12.03.2013

The Convention for the Avoidance of Double Taxation between Hong Kong and Mexico, signed on June 18, 2012, entered into force on March 7, 2013.

According to the agreement, the pact will be effective for profits tax, salaries tax and property tax in Hong Kong for any year of assessment beginning on or after April 1, 2014, and from January 1, 2014, in Mexico for federal income tax and business flat-rate tax.

The Agreement provides for lower rates of withholding taxes in the contracting state in which the income is derived, in respect of dividends, interest and royalties.

Income from dividends is only taxable in the country of the recipient. Interest income can be taxed in both territories, but in the territory that the income arises withholding tax will be capped at 4.9% if the beneficial owner is a bank; and at 10% in all other cases where the receipient is the beneficial owner of the asset from which interest income is derived. For royalties income, if the recipient is the beneficial owner of the income, the withholding tax rate is capped at 10%.

The agreement also includes provisions for the exchange of tax information in line with the Organization for Economic Cooperation and Development's standard, to allow the two territories' tax authorities to share data to support investigations into fiscal crime on request.

On the basis: http://www.gov.hk/en/residents

Expert’s opinion

One more agreement to the collection of Hong Kong. Nowadays, when the economic situation in the world leaves something to be desired Asian region, in particular Hong Kong attracts many of businessmen. There a lot of information and articles about this unique country and for trade companies Hong Kong is ideal, especially in cases of direct business with Chinese producers.

And not low tax treatment is so important, as financial instrument, which allow to operate smoothly. For this reason, Hong Kong’s banks are high-demand along with Singaporean banks.

Although procedure of opening bank accounts can take a lot of time, because of the absent agreement on the exchange of tax information with Russia and Ukraine, the issue of confidentiality of information is solved correctly and competently. 

Irina Lomakina ( Director of Moscow office of “Honest&Bright” Company)