Jul 2014, Issue 9
Hong Kong signed treaty with another major trading partner, Korea
Hong Kong signed a comprehensive double tax agreement (CDTA) with Korea on 8 July 2014. Potential benefits for Hong Kong investors under the HK/Korea CDTA include the reduced withholding tax (WHT) rates on dividends, interest and royalties, possible elimination of the WHT on equipment rental and permanent establishment protection for active business income. However, the HK/Korea CDTA does not offer any tax exemption for gains derived from disposal of shares in a Korean company or a Korean property holding company.
With the signing of the HK/Korea CDTA, Hong Kong companies currently investing into Korea through an intermediary established in a jurisdiction having a tax treaty with Korea should revisit their existing holding structures and assess if any such intermediary is still advantageous to the group from a tax perspective. Other issues of Hong Kong Tax News Flash
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