Double taxation treaties in Hong Kong

Until June 2001, the territory had no comprehensive double taxation agreements in place. Since under the “territorial principle” only Hong Kong source income is taxable the double taxation of income does not usually occur thereby obviating the need for double taxation treaties. However the government is now entering an increasing number of tax treaties of various types. Under article 151 of the Basic Law the territory can negotiate its own double taxation treaties independently of China using the abbreviation Hong Kong, China. The territory is not able to take advantage of any double taxation treaties which China may enter into because only mainland taxes are mentioned in these treaties. Nor will China impose the terms of any double taxation treaties on the territory given that under articles 106-108 of the Basic Law it guaranteed Hong Kong the right to maintain an independent taxation system free of interference from the mainland until the year 2047.

Legislation which came into operation in March 2010 allows Hong Kong to enter into comprehensive DTAs, incorporating the Organisation for Economic Cooperation and Development (OECD) international standard on exchange of information.

As at September 7, 2012, comprehensive double taxation avoidance treaties had been concluded between Hong Kong and the following countries (with ‘in force’ dates):

Hong Kong also has signed double taxation agreements concerning aviation and shipping income with a number of countries (although some of these agreements have been superseded by recently-signed comprehensive double tax avoidance agreements).

There is also a memorandum of understanding with China under which: