The tax treaty provides for a low withholding tax rate of five percent for dividend payments. Interest, royalties, and fees are subject to a low withholding tax rate of ten percent.
The tax treaty between India and Hong Kong entered into force on November 30, 2018. The treaty will be effective from April 1, 2019.
The tax treaty provides for a low withholding tax rate of five percent for dividend payments. Interest, royalties, and fees are subject to a low withholding tax rate of ten percent.
Under the treaty, the definition of a “permanent establishment” includes the furnishing of services, including consultancy services, by an enterprise through its employees if such activities continue for a period exceeding 183 days within any 12-month period.
Conflicts relating to dual-tax residence of companies shall be resolved through the mutual agreement procedure.
The tax treaty also contains a detailed exchange of information clause.
The tax treaty was signed in March 2018.
“India was the seventh largest trading partner of Hong Kong in 2017. The tax treaty will bring a greater degree of certainty on taxation liabilities for those who engage in cross-border business activities, and help promote bilateral trade and investment activities,” the Hong Kong Government noted in a November 30 release.