Hong Kong signs comprehensive double taxation avoidance agreement with Türkiye

24th September 2024 – (Hong Kong) The Hong Kong Special Administrative Region Government, represented by Secretary for Financial Services and the Treasury Mr Christopher Hui, signed a comprehensive avoidance of double taxation agreement (CDTA) with Türkiye on 24th September. This agreement marks a significant step in Hong Kong’s strategy to expand its CDTA network, particularly with jurisdictions involved in the Belt and Road Initiative.

The CDTA, the 51st agreement of its kind for Hong Kong, establishes the allocation of taxing rights between the two jurisdictions, providing clarity for investors regarding their potential tax liabilities from cross-border economic activities. The signing took place during the Fifth Belt and Road Initiative Tax Administration Cooperation Forum, with Mr Bekir Bayrakdar, Commissioner of the Turkish Revenue Administration, representing Türkiye.

Mr Hui emphasised the importance of this agreement, stating, “Türkiye is participating in the Belt and Road Initiative. The signing of the CDTA highlights our commitment to deepening tax cooperation under this initiative. I am confident that this agreement will further enhance economic and trade relations between Hong Kong and Türkiye, contributing to the high-quality development of the Belt and Road Initiative through improved connectivity.”

The agreement offers several tax relief arrangements, including:

• A cap on Türkiye’s withholding tax rate for Hong Kong residents on dividends at 5% or 10%, depending on shareholding percentages, while interest and royalties will be capped at 10%. For financial institutions, the rate could be reduced to 7.5% for loans or debt instruments with a maturity exceeding two years or for royalties related to industrial, commercial, or scientific equipment.

• Hong Kong airlines operating flights to and from Türkiye will be taxed at Hong Kong’s corporation tax rate on profits, with no taxation in Türkiye.

• Profits from international shipping transport earned by Hong Kong residents arising in Türkiye will not be subject to taxation in Türkiye.

  
  

Mr Hui reiterated the government’s commitment to negotiating further agreements with trading and investment partners to enhance Hong Kong’s appeal as a business and investment hub, solidifying its position as an international economic and trade centre.