Hong Kong and Vietnam Tuesday signed an agreement for the avoidance of double taxation and the prevention of fiscal evasion on tax and income, says a press statement issued here by the Hong Kong Special Administrative Region (HKSAR) government.
The agreement was signed by HKSAR government Financial Secretary John Tsang and Vietnam Vice Minister of Finance Do Hoang Anh Tuan in Hanoi, capital of Vietnam, says the statement.
At the signing ceremony Tuesday, Tsang was quoted as saying that the agreement will boost bilateral relations between Hong Kong and Vietnam.
"The agreement represents tax savings and a higher degree of certainty on taxation rights for investors from both Vietnam and Hong Kong. It also fosters economic co-operation and protects both our governments' revenue base," said Tsang.
Any Hong Kong tax paid by Vietnam residents or companies will be allowed as credit against any tax payable in respect of the same income in Vietnam. Royalties withholding tax will be capped at 7 percent where payment is made for the use of patents, designs or models, plans, secret formulas or processes.
The interest withholding tax will be reduced from the current rate of 10 percent to nil if the recipient is the HKSAR Government, the Hong Kong Monetary Authority or other recognized institutions as mutually agreed.
Profits from international shipping transport earned by Hong Kong residents arising in Vietnam will enjoy tax exemption. Hong Kong airlines operating flights to Vietnam will be taxed at the much lower corporate rate of 16.5 percent in Hong Kong.
The agreement will come into force after the completion of ratification procedures for both sides, says the statement.
Source: Xinhua
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