Hong Kong’s tax authority announced that the agreement between Hong Kong and Korea for the avoidance of double taxation and prevention of income tax evasion came into force.
The agreement was initially signed in July 2014, which was followed by the ratification procedures in Hong Kong and Korea. The tax agreement came into force on September 27, 2016, and will be in effect in Hong Kong for any assessment year that starts on or after April 1, 2017.
On March 16, Hong Kong’s Inland Revenue Department and Korean National Tax Service agreed to exchange tax information immediately after their tax treaty becomes effective and promised to work together closely. On that occasion, the Korean National Tax Service said that “Although Hong Kong is the third-largest foreign investment destination for South Korea and the country where South Korean corporations have the largest number of financial accounts abroad, we could not collect financial and tax information from it because of the lack of legal grounds. However, the treaty is expected to allow us to get the information we need from now on as we are doing with 115 countries across the world.”
Before the DTA, Hong Kong residents receiving interest from Korea were subject to Korea's withholding tax, which ranged from 14 to 20 percent. Under the agreement, such withholding will be capped at 10 percent. The Korean withholding tax on royalties, will be capped at 10 percent instead of 20 percent and the Korean dividends withholding tax on Hong Kong residents will be reduced from 20 percent to 15 or 10 percent, depending on the percentage of their shareholdings.
Our digital platform enhances your tp experience and is ready to let you discover new and related content.
It provides a range of social features:
- Links to Social media (LinkedIn, Twitter, Facebook, YouTube and Xing)
- Sharing our news by monthly Newsletter(s)
- Discuss key issues with our TPA Global team members via blogs and social media
Copyright © 2018
Transfer Pricing Associates BV.
All rights reserved.