A double tax treaty between Hong Kong and Thailand allows for the prevention of double taxation for individuals and companies deriving income from both states. The agreement applies to the taxes applicable on income and it includes provisions for the avoidance of fiscal evasion.
The double tax treaty (DTT) includes important provisions regarding the taxation of dividends, interest, royalties or capital gains but also clearly defines the residence status for companies and individuals. Foreign investors from Thailand in Hong Kong can benefit from this treaty as their income produced in the Special Administrative Region will only be taxed once.
Taxes and persons covered by the Hong Kong-Thailand DTT
The agreement between the two jurisdictions applies to persons or legal entities that are residents of one or both signatory states. All taxes on income are covered, regardless of the manner in which they are levied. In case of the Hong Kong Special Administrative Region, the taxes are:
– the profits tax,
– the personal income tax (salaries tax),
– the property tax.
In the case of Thailand, the double tax treaty applies to the income tax and the petroleum income tax. Any other taxes applicable after the signing date of the treaty are also subject to the reduced rates.
General information about the double tax treaty with Thailand
For the purpose of the double tax treaty, a company is a corporate legal entity that is subject to tax either in Hong Kong or in Thailand. Hong Kong residents are those individuals who are usually residing in the city or who have spent more than 180 days during one tax year. Under the laws of Thailand, a resident is an individual who has his domicile or residence in the country (or its place of management in case of companies).
Types of companies that are subject to the treaty include branches in Hong Kong or Thailand, offices, places of management, factories, workshops or others. Under the double tax treaty, the withholding tax rate on dividends, interest, and royalties is reduced to rates between 0% and 15%, if certain criteria are met.
You can contact our company registration agents in Hong Kong for more details about the reduced treaty rates and other information about the taxation of foreign enterprises in the city.