Double Taxation Agreement China Hong Kong

Double Taxation Agreement between China and Hong Kong: What You Need to Know

Double taxation is a pressing issue for individuals and businesses operating in multiple countries. It is an unavoidable problem that arises when a taxpayer earns income in a country where they are not a resident. To combat this issue, governments sign Double Taxation Agreements (DTAs) to provide relief from double taxation. One such agreement is the Double Taxation Agreement China Hong Kong.

What is Double Taxation Agreement?

A Double Taxation Agreement aims to eliminate or reduce double taxation on the income of taxpayers living in two countries. The agreement sets limits on the taxing rights of each country. It seeks to create a favorable environment for the exchange of goods, services, and capital between two countries. Most DTAs cover different types of taxes, including income tax, capital gains tax, and estate tax.

What is Double Taxation Agreement China Hong Kong?

The Double Taxation Agreement China Hong Kong was signed in 2006 and came into effect in 2007. The aim of this agreement was to promote trade, investment, and economic cooperation between the two regions. The DTA provides relief for individuals and businesses to prevent double taxation on income, salary, profits, and dividends.

How Does it Work?

The DTA between China and Hong Kong specifies the taxation rights of each country. For example, if a Hong Kong resident operates a business in China, the business income earned in China is subject to tax in both countries. However, the agreement ensures that tax paid in China can be claimed as a tax credit in Hong Kong. It means that the taxpayer will not have to pay taxes twice on the same source of income.

What are the Benefits of the Double Taxation Agreement China Hong Kong?

The DTA offers various benefits for individuals and businesses in both China and Hong Kong. These benefits include:

– Reduction in tax liability: The agreement reduces the tax liability of taxpayers by eliminating or reducing double taxation.

– Improved investment environment: The DTA encourages investors to invest in both regions by providing relief from double taxation.

– Stimulated economic development: The DTA promotes economic development by encouraging trade and investment between the two regions.

– Enhanced tax transparency: The agreement promotes tax transparency by establishing cooperation between tax authorities.

What are the Key Provisions of the Double Taxation Agreement China Hong Kong?

The key provisions of the DTA between China and Hong Kong include:

– Taxation of income from employment: The DTA provides relief from double taxation on income earned from employment in both regions.

– Taxation of business profits: The agreement provides for taxation of business profits in both regions. It specifies the scope of taxation in both countries to avoid double taxation.

– Taxation of dividends: The DTA provides relief from double taxation on dividends paid out to residents of both regions.

– Taxation of capital gains: The agreement provides for the taxation of capital gains arising from the disposal of immovable property, shares, and other assets in both countries.


The Double Taxation Agreement China Hong Kong provides a framework for eliminating or reducing double taxation on income and investments between the two regions. It offers relief to individuals and businesses by ensuring that tax paid in one region can be claimed as a tax credit in the other. The agreement promotes trade, investment, economic cooperation, and tax transparency between China and Hong Kong. Therefore, it is an essential agreement for individuals and businesses operating in both regions.