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Source: Hong Kong Information Services

Hong Kong and Estonia signed a comprehensive avoidance of double taxation agreement on September 25.

Secretary for Financial Services & the Treasury James Lau penned the deal with Estonia’s Minister of Finance Martin Helme in Tallinn, Estonia.

It signifies the Hong Kong Special Administrative Region Government’s sustained efforts to expand the city’s tax treaty network.

The compact will grant mutual taxing rights aimed at helping investors better assess their potential tax liabilities from cross-border economic activities.

Under it, any tax paid in Estonia by Hong Kong residents will be allowed as a credit against the tax payable in Hong Kong on the same income, subject to provisions of Hong Kong tax laws.

For Estonian residents, their income taxed in Hong Kong will be exempted from the Estonian tax, or the tax they pay in Hong Kong will be deducted from the Estonian tax in respect of the same income.

The arrangement also provides several tax relief measures, including capping Estonia’s withholding tax rate for Hong Kong residents on royalties at 5% instead of the current 10% rate.

The agreement will take effect once both parties ratify the procedures.

Noting this is the 42nd agreement Hong Kong has signed with its trading partners, Mr Lau said the pact will reinforce economic and trade connections between Hong Kong and Estonia, and offer additional business or investment incentives.

In 2018, Estonia was Hong Kong’s 75th largest trading partner. In addition to Estonia, Hong Kong has ratified similar agreements with 17 European Union member states.

After the signing ceremony, Mr Lau further discussed financial sector resilience against the global economic downturn and trade tension challenges with Mr Helme.

They also talked about the development of cryptocurrencies and their impact on monetary and financial stability as well as anti-money laundering initiatives.

Before concluding his Estonia visit, Mr Lau called on Chinese Ambassador to Estonia Li Chao, and forged closer ties with financial technology and commercial sector leaders.

MIL OSI Asia Pacific News