Hong Kong and Thailand have signed a double tax agreement (DTA) that serves as a method of encouraging foreign investments in both countries and a method of avoiding tax evasion. The document was signed in 2005 and foreign investors in Hong Kong from Thailand and vice versa benefit from capped tax rates and a single point of taxation according to the jurisdiction in which they derive the income from.
Hong Kong has signed a number of double tax agreements and it constantly improving its business and economic relations with other countries. Our law firm in Hong Kong can help you with detailed information about these treaties as well as adequate taxation counselling for your business.
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The taxes covered by the double taxation agreement
The agreement for the avoidance of double taxation between Hong Kong and Thailand concerns all taxes on income levied by the Governments of the two jurisdictions. In the case of Hong Kong, the treaty applies to the profits tax, the salaries tax, and the property tax. For Thailand, the DTA applies to the income tax and the petroleum income tax.
The double tax treaty also applies to those taxes that are imposed in place of or in addition to the profit taxes and the others mentioned above. The Governments of the two Parties must notify one another of any changes they may impose regarding their taxation schemes for companies and individuals.
Hong Kong imposes a low taxation regime that attracts many foreign investors in the area. If you want to know more about taxation, one of our Hong Kong lawyers can help you.
Tax benefits under the Hong Kong – Thailand DTA
The double tax agreement applies to Hong Kong residents and Thai residents alike. Its provisions apply to individuals who stay in Hong Kong for more than 180 days in one tax year and to Thai residents. The term resident also refers to companies incorporated in Hong Kong and managed from the city. Permanent establishments under the DTA are permanent offices, building sites or other sites that are functional for at least six months.
The DTA between Hong Kong and Thailand establishes certain preferential tax rates, namely for the withholding taxes on dividends or royalties. Legal entities can benefit from a total exemption from the withholding tax rate on dividends, under certain conditions.
If you are an investor from Thailand in Hong Kong and need legal advice and counselling on taxation and commercial matters please do not hesitate to contact our law firm in Hong Kong.