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Hong Kong and India signed a comprehensive double tax agreement (DTA) on 19 March 2018. It’s the 39th DTA signed by Hong Kong.
Salient points of the DTA for a Hong Kong tax resident company includes:
(a) India’s withholding tax rate for Hong Kong residents on interest (currently at 20 per cent in general) will be capped at 10 per cent, subject to satisfying the beneficial ownership test;
(b) Hong Kong airlines operating flights to India will be taxed at Hong Kong’s corporation tax rate, and will not be taxed in India; and
(c) Profits from international shipping transport earned by Hong Kong residents arising in India and subject to tax there will enjoy 50 per cent reduction in tax in India.
The DTA has also incorporated an article on exchange of information, which enables Hong Kong to fulfil its international obligations on enhancing tax transparency and combating tax evasion.
