THE DTAA, which was signed between Hong Kong
and Japan on November 9, 2010, has come into effect from August 14, 2011.
It
is reported that under the agreement, any Japanese tax
paid by the companies will be allowed as a credit against the tax payable in
Hong Kong in respect of the income, subject to the provisions of the fiscal
laws of Hong Kong.
The
withholding tax on dividend income has been capped at 5% for a company holding
for a time-frame of six months at least 10% of the voting rights in the company
paying dividends, and 10% for other cases. Hong Kong residents receiving
royalties from Japan are subject to a current withholding tax at 20% in Japan.
The Japanese interest withholding tax on Hong Kong residents will be reduced
from the current rate of 20% to 10%.
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