Hong Kong Double Taxation Relief

Double Taxation Relief for Hong Kong Residents

Double taxation occurs when two or more tax jurisdictions have tax jurisdiction over the same income or profit of a taxpayer and tax them simultaneously.

The Hong Kong Special Administrative Region (Hong Kong) adopts the principle of regional source taxation, where Hong Kong residents are only required to pay tax on income/profits originating from Hong Kong, while income/profits originating from outside Hong Kong are generally not subject to taxation in Hong Kong. Therefore, generally speaking, Hong Kong residents do not have the issue of double taxation. Many tax jurisdictions may impose global taxes on their residents, but if residents of these tax jurisdictions conduct business in Hong Kong and have already paid taxes in Hong Kong on their income/profits earned from Hong Kong, these tax jurisdictions will also provide unilateral tax credits to their residents.

Nevertheless, the Hong Kong Special Administrative Region government believes that signing a comprehensive agreement/arrangement for the avoidance of double taxation with Hong Kong's trading partners has its merits. Comprehensive avoidance of double taxation agreements/arrangements clearly delineate the tax rights of both parties, helping investors more accurately assess the tax burden generated by their economic activities and providing additional incentives to attract overseas companies to invest in Hong Kong. Similarly, agreements/arrangements will also increase the interest of local companies in investing overseas. Therefore, the policy of the Hong Kong Special Administrative Region government is to establish a comprehensive network of agreements/arrangements to avoid double taxation, in order to reduce the opportunities for Hong Kong residents and residents of agreement/arrangement partners to be subject to double taxation. Hong Kong has always been actively communicating with its trading partners, seeking to negotiate comprehensive agreements/arrangements to avoid double taxation (covering different types of income).