The United Arab Emirates and Hong Kong have signed their first agreement on the avoidance of double taxation in 2010. The agreement covered the taxation of income resulted from commodities trading and services. At the end of 2014, the UAE and Hong Kong have renewed their double taxation treaty by adding a protocol referring to the income tax imposed in both states and is currently pending ratification. The agreement is meant to promote investment and strengthen the existing economic relations between the Emirates and Hong Kong.
Our company formation agents in Dubai can provide you with the full list of UAE’s double taxation agreements.
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Taxation under the UAE-Hong Kong double tax treaty
The new Hong Kong- UAE comprehensive agreement on the avoidance of double taxation (CDTA), as it was called by both parties, covers the following taxes:
- the profits, salaries and properties taxes in Hong Kong,
- the income and the corporate tax in the United Arab Emirates.
The agreement also covers other taxes related to any of the taxes above and any change in one country’s taxation systems must be notified to the other party.
The double tax treaty is expected to help foreign investors in the UAE and Hong Kong to better assess their tax liabilities resulted from cross-border economic activities. For additional information about the legislation of foreign investment in the UAE you can refer to our specialists in company incorporation in Dubai.
How will the UAE-Hong Kong double taxation treaty be enforced?
The UAE-Hong Kong double taxation agreement covers Hong Kong and UAE residents and companies. The treaty also defines permanent establishments of a Hong Kong or UAE company in the other state as a branch office, place of management or office.
The avoidance of double taxation will consist of a credit granted against the tax payable in the UAE or Hong Kong. The double taxation agreement between the UAE and Hong Kong also contains a clause on the exchange of information which will help both countries to be in line with international standards and in combating tax evasion.
As the agreement has not been ratified yet we invite you to contact our agents in Dubai for information related to the taxation of Hong Kong companies doing business in the UAE.