Jan. 28 – On January 14, 2013, Hong Kong and Italy signed a comprehensive double taxation agreement (DTA). The agreement provides legal basis for allocating the taxing rights between the two jurisdictions.
Under the DTA, Italian residents will be allowed to credit taxes paid in Hong Kong for HK-derived income against tax payable in Italy. Similarly, Hong Kong companies doing business through a permanent establishment in Italy can deduct taxes paid in Italy against tax payable in Hong Kong.
The DTA also reduces Italy’s withholding tax rates on interests, royalties, and dividends received by HK residents from 20 percent, 22.5 percent and 20 percent to 12.5 percent, 15 percent and 10 percent, respectively.
An exchange of information article has also been incorporated into the DTA to prevent tax evasion. This article entitles the two jurisdictions to request tax-related information from each other.
The comprehensive DTA will come into effect after the completion of ratification procedures on both sides.
Currently, Hong Kong has concluded comprehensive DTAs with Belgium, Thailand, Mainland China, Luxembourg, Vietnam, Brunei, the Netherlands, Indonesia, Hungary, Kuwait, Austria, the United Kingdom, Ireland, Liechtenstein, France, Japan, New Zealand, Portugal, Spain, the Czech Republic, Switzerland, Malta, Jersey, Malaysia, Mexico and Canada.
The complete Hong Kong-Italy DTA can be found by clicking here.
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