Malaysia-Hong Kong Special Administrative Region Double Taxation Agreement Signed

Friday, 18 May 2012 04:29

Malaysia and the Hong Kong Special Administrative Region ("HKSAR") have signed a comprehensive Double Taxation Agreement ("DTA") on 25 April 2012.  The DTA will, however, only come into force after the completion of the ratification procedures by both parties.

The DTA provides that the following maximum Malaysian withholding tax rates will be applicable on payments to residents of HKSAR where the relevant conditions are met (amongst others, the resident of HKSAR must be the beneficial owner of the interest, royalties or technical fees):

Type of Payment

Domestic Rate

DTA Rate

Interest

15 percent

10 percent

Royalties

10 percent

8 percent

Technical Fees

10 percent

5 percent

Subject to completion of the ratification procedures, the effective date of the DTA will be as follows:

• for year of assessment beginning on or after the first day of January in the calendar year following the year in which the DTA enters into force.
• for any year of assessment beginning on or after the first day of April in the calendar year following the year in which the DTA enters into force.

Source: KPMG Malaysia