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Hong Kong – Canada Double Tax Treaty

Hong Kong – Canada Double Tax Treaty

By Vlad Cuc, specialist in company formation matters

The avoidance of double taxation

Hong Kong and Canada have concluded a double tax treaty with the purpose of avoiding double taxation and fiscal evasion. It applies to residents of one or both countries who are doing business in the other jurisdiction. The treaty establishes which country can impose taxes on income so that individuals and companies may not be taxed twice on the same revenue.

Hong Kong has signed a number of other double tax treaties. These agreements are helpful for encouraging foreign investments and strengthening the economic relations with other countries.

Taxes covered by the Hong Kong – Canada DTA

The taxes covered by the double tax agreement (DTA) between the two jurisdictions concern all those on income levied by one country or the other and any others imposed in place of or in addition to the ones stated in the treaty, after its signature date.

In case of Hong Kong the double tax treaty applies for:

– the corporate income tax;

– the personal income tax and the property tax.

In case of Canada the DTA applies for those taxes imposed by the Canadian Government under the Income Tax Act.

If you want to open a company in Hong Kong our specialists can give you more details about the taxation system in the city.

Advantages for foreign investors in Hong Kong

The double taxation agreement between Hong Kong and Canada offers preferential withholding tax rates. The withholding tax rate for dividends is 5% if the company receiving the payment controls a minimum percentage of the company paying the dividends. In all other cases the rate is 15%.

The types of income covered by the treaty include that from immovable property, business profitsincome from employment or as director’s feespensions and income for entertainers and sports persons. 

Our company registration consultants in Hong Kong can help you with more details about this treaty if you are a Canadian investor having economic and business ties in the city.

You can also contact our experts for any company incorporation matters as well as professional accounting services.