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Publications and Press Releases :
Press Release
: News Archives
Order to implement the Comprehensive Agreement
for Avoidance
of Double Taxation with Thailand gazetted
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An Order, made by the Chief Executive in Council under the Inland
Revenue Ordinance, to implement the Agreement with Thailand for
the Avoidance of Double Taxation, is gazetted today (October 28).
This is the second comprehensive
agreement for the avoidance of double taxation (known as a CDTA)
concluded by the Hong Kong Special Administrative Region Government
with another economy and the first with a partner in the Asia Pacific
region.
Subject to the completion of the
necessary procedures for bringing the agreement into force by both
sides, the agreement will take effect with respect to Hong Kong
taxes earliest from April 1, 2006, and with respect to Thai taxes
from January 1, 2006. The Order will be tabled at the Legislative
Council next Wednesday (November 2) for negative vetting.
The Hong Kong/Thailand CDTA was signed
by the Secretary for Financial Services and the Treasury, Mr Frederick
Ma, and the Thai Minister of Foreign Affairs, Dr Kantathi Suphamongkon,
in Bangkok on September 7, 2005.
"Through the allocation
of taxing rights between the two places and the provision of tax
relief in case of double taxation, the Agreement will ensure that
investors will not have to pay tax twice on a single source of income,"
a government spokesman said.
"The agreement will bring
about tax savings to Thai and Hong Kong investors doing businesses
in each other's jurisdiction. This will help promote investment
and trade between the two places."
Under the agreement:
* Profits remitted by a branch office
in Thailand to its Hong Kong head office will be exempt from the
current 10% withholding tax in Thailand.
* Thai withholding tax for royalties
that are received from Thailand by a Hong Kong resident and that
are not attributable to a permanent establishment in Thailand will
be reduced to 5% if paid for the use of, or the right to use, any
copyright of literary, artistic or scientific work (films taxable
under this head); and 10% if paid for the use of, or the right to
use, any patent, trademark, design or model, plan, secret formula
or process. The current rate is 15% on the gross amount of royalties.
* In the case of interest received
by a Hong Kong resident (when the interest arises in Thailand and
is not attributable to a permanent establishment), the current Thai
withholding tax is 15% of the gross amount. Under the Agreement,
the Thai withholding tax will be reduced to 10% if interest is paid
to a financial institution or insurance company, or if interest
is paid with respect to indebtedness arising from the sale on credit
of equipment, merchandise or services.
* Income from operation of aircraft
in international traffic earned by a Hong Kong resident in Thailand
will be exempt from Thai income tax.
* Thai income tax for ship operations
in international traffic by a Hong Kong resident will be reduced
by 50%.
Ends/Friday, October 28, 2005
Issued at HKT 11:18
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