Double taxation agreement between Hong Kong and Canada

06.11.2013

The agreement on the avoidance of double taxation and prevention of fiscal evasion in respect to taxes on income between the Government of Hong Kong and the Government of Canada finally came into force. The agreement was signed on 11 November 2012 and now it was ratified.

This agreement establishes the following interest rates:

- Income tax - 10%

- Withholding tax on royalties - 10%

- Withholding tax on dividends which are paid to residents of Hong Kong - 15%, under certain conditions, may be reduced to 5%

In Hong Kong, the new agreement will apply from the 1^st day of April 2014.

Based on: http://www.ird.gov.hk

Expert’s opinion

Hong Kong is long recognized financial center. It is so financial that does not allow Russian money into its banking sector. Hong Kong and Chinese banks are developing quietly and rapidly, not worrying about the economy and ratings.

Canada, as a stable country, which allows Ukrainian emigrants to make settlements, will have only advantageous from this signing. With a reasonably created holding structure, it is possible not only with minimum taxes to pay dividends to the founder, but also to optimize the corporate tax.

Both countries will gain benefits from the signed agreement, as it will help to attract more investments in the country's budget.

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