Hong Kong Tax Newsflash

Hong Kong SAR (HK) signed a Comprehensive Double Tax Agreement (CDTA) with Bangladesh on 30 August 2023.  This is the 47th CDTA concluded by HK.

Below is a comparison of the withholding tax rates applicable to dividends, interest and royalties, under the respective domestic tax law and the HK-Bangladesh CDTA:

NB1: The 4.95% rate generally applies.  If the royalty is paid to an associated entity and the intellectual property has been owned by a person carrying on business in HK, 16.5% applies.  If the taxpayer is eligible for two-tiered tax rates, 2.475% (or 8.25% if higher rate) applies on the first HKD 2 million of assessable profits and 4.95% (or 16.5% if higher rate) on the remaining amount.

NB2: 10% if the beneficial owner is a company which holds directly at least 10% of the capital of the company paying the dividends; 15% in all other cases.

The HK-Bangladesh CDTA also provides that profits of an enterprise of a contracting party derived in the other contracting party from the operation of ships in international traffic will be subject to a 50% tax reduction.  For example, if a Hong Kong resident derived profits from international shipping transport in Bangladesh, only 50% of the profits will be subject to tax in Bangladesh.

The HK-Bangladesh CDTA will come into force after the completion of ratification procedures by both jurisdictions.  The CDTA can be downloaded from this link.

^{Tax Newsflash is published for the clients and professionals of Deloitte Touche Tohmatsu. The contents are of a general nature only. Readers are advised to consult their tax advisors before acting on any information contained in this newsletter.}

If you have any questions, please contact our professionals:

Authors

Doris Chik
Tax Partner
+852 2852 6608
dchik@deloitte.com.hk

Carmen Cheung
Tax Manager
+852 2740 8660
carmcheung@deloitte.com.hk

Kiwi Fung
Tax Manager
+852 2258 6162
kifung@deloitte.com.hk

International and M&A Tax

National Leader
Vicky Wang
Tax Partner
+86 21 6141 1035
vicwang@deloitte.com.cn

Hong Kong
Anthony Lau
Tax Partner
+852 2852 1082
antlau@deloitte.com.hk