Hong Kong’s secretary for financial services and the treasury Professor Chan and Miroslav Kalousek, minister of finance in the Czech Republic put their names to the agreement in Prague yesterday, marking Hong Kong’s 21st comprehensive agreement for the avoidance of double taxation with a trading partner.
To date, Hong Kong has signed CDTAs with Ireland, Liechtenstein, Luxembourg, Switzerland, Portugal, Belgium, Thailand, the Mainland of China, Vietnam, Brunei, the Netherlands, Indonesia, Hungary, Kuwait, Austria, the UK, France, Japan, New Zealand and Spain. It is actively looking to expand its network of CDTA’s further.
The agreement is expected to help investors better assess their potential tax liabilities from cross-border economic activities and encourage closer economic and trade ties between the two regions.
In the absence of a CDTA, Hong Kong residents receiving dividends from the Czech Republic not attributable to a permanent establishment in the Czech Republic would be subject to the Czech withholding tax, which is currently set at 15%.
Under the new agreement, this withholding tax rate will be capped at 5%. Hong Kong residents will also be exempted from the Czech withholding tax on interest, currently set at 15% and the Czech withholding tax on royalties, currently at 15%, will be capped at 10%.
The agreement will be implemented after the ratification process has been completed on both sides.
