Desktop VersionSite MapContact UsShare RSS


(Source : Government Information Centre)

Order to implement the Comprehensive Agreement for Avoidance
of Double Taxation with Thailand gazetted


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