UAE & Hong Kong – Double Taxation Agreement Policies & Tax Rates

Overview

The Double Taxation Agreement (DTA) between the UAE and Hong Kong, signed on December 11, 2014, is a relatively recent agreement compared to others. This agreement is significant as it marks the first of its kind between the two regions, laying the foundation for clearer tax guidelines and fostering stronger economic ties. The agreement covers Hong Kong profits tax, salaries tax, and property tax, and covers U.A.E. income tax and corporate tax. In this article, you’ll get a clear idea about DTA’s policies and tax rates on different sources of income. 

Tax Implications – Double Taxation Agreement Between UAE & Hong Kong

In Hong Kong, the official agreement between countries covers various types of taxes like income, taxes on profits, capital gains, and other types of taxes related to a person’s or company’s income. While in the UAE, the agreement only covers taxes related to income and corporate tax.

The Agreement also applies to any new taxes introduced after it was signed, whether they are added to existing taxes or replaced them. However, it does not cover taxes taken directly from winnings (like lottery prizes) or taxes that are withheld at the source. For example, taxes are deducted from wages before the person receives their salary. Here are several tax agreements with a 5% tax rate applied uniformly to dividends, interest, royalties, and capital gains.

Highlights of Capital Gains – DTA’s UAE & Hong Kong

Generally, gains are exempt, with a few exceptions. These include gains from the sale of real estate, from the sale of movable property that forms part of the business assets of a permanent establishment, and from the sale of shares in a company where 50% or more of its value is derived, directly or indirectly, from real estate in a contracting state. However, there are exceptions to this rule for shares listed on a recognized stock exchange, for shares sold or exchanged as part of a company reorganization, such as a merger or split, or for shares in companies that use real estate for their business activities.

Arnifi – As Your Trusted Partner

The Double Taxation Agreement (DTA) between the UAE and Hong Kong, signed on December 11, 2014, establishes clear tax guidelines and strengthens economic ties between the regions. It covers various taxes such as income, corporate tax, and property taxes in both jurisdictions. The agreement addresses dividends, interest, royalties, and capital gains, with specified rates for dividends, interest, and royalties at 5%. While capital gains are generally exempt, there are exceptions for the sale of real estate, business assets of a permanent establishment, or shares linked to real estate value, with certain exemptions for listed shares and corporate reorganizations. For Better understanding have a word with our experts at Arnifi.

Also Read: https://arnifi.com/blog/double-taxation-agreement-between-uae-germany/