Comprehensive Double Tax Agreement with Canada

On 11 November 2012, Hong Kong signed a comprehensive double tax agreement ("CDTA") with Canada. This is the 26th CDTA concluded by Hong Kong with its trading partners.

The CDTA with Canada explained the taxing rights and the relief of tax rates on different types of passive income between two places.

In before, a Hong Kong company earning profit through its permanent establishment in Canada may be subject to both Hong Kong and Canada tax. On the other hand, a Canadian resident receiving income from Hong Kong may also be levy tax by both places.

Under the agreement, company tax paid under the laws of Canada will be allowed credit against HKSAR tax payable. At the same time, tax paid for any income or profit derived from Hong Kong will be allowed credit against Canadian tax payable.

The following table provides a summary of agreed withholding tax rates on different types of passive income.

For the details of the comprehensive double tax agreement with Canada, please refer to the Inland Revenue Website announcement as
http://www.ird.gov.hk/eng/pdf/Agreement_Canada_HongKong.pdf