Hong Kong concluded a Comprehensive Double Taxation Agreement (“CDTA”) with Austria on May 25, 2010. This is Hong Kong’s 11th CDTA, and provides for the reduction of withholding tax on dividends to 0% if the beneficial owner is a company that directly holds at least 10% of the capital of the company paying the dividend (and in all other cases 10%), and to 3% in respect of royalties.
Here is a summary of the withholding tax rates applicable to Hong Kong’s 11 CDTAs:
Withholding Tax Rates Under Hong Kong Treaties
|
Country
|
Dividends
|
Royalties
|
Interest
|
| Austria | Nil-10%(1) | 3% | Nil |
| Belgium |
5-15%(2)
|
5%
|
10%
|
| Brunei Darussalam |
Nil
|
5%
|
5-10%(3)
|
| Hungary |
5 – 10%(4)
|
5%
|
5%
|
| Indonesia |
5-10%(5)
|
5%
|
10%
|
| Kuwait |
0-5%(6)
|
5%
|
5%
|
| Luxembourg |
0-10%(7)
|
3%
|
Nil
|
| Mainland China |
5-10%(8)
|
7%
|
7%
|
| The Netherlands |
0-10%(9)
|
3%
|
Nil
|
| Thailand |
10%
|
5-10%(10)
|
10-15%(11)
|
| Vietnam |
10%
|
7-10%(12)
|
10%
|
| Explanatory notes | |
| Note (1) | 0% if the beneficial owner is a company that directly holds at least 10% of the capital of the company paying the dividends. In all other cases, 10%. |
| Note (2) | 5% if the beneficial owner is a company that directly holds at least 10% of the capital of the company paying the dividends. In all other cases, 15%. |
| Note (3) | 5% if the recipient is a bank or financial institution. In all other cases, 10%. |
| Note (4) | 5% if the beneficial owner is a company directly owning at least 10% of the capital of the company paying the dividends. In all other cases, 10%. |
| Note (5) | 5% if the beneficial owner is a company that directly owns at least 25% of the capital. In all other cases 10%. |
| Note (6) | 0% if the beneficial owner is the government. In all other cases, 5%. |
| Note (7) | 0% if the beneficial owner is a company that directly owns at least 10% of the capital of the company paying the dividends or a participation with an acquisition cost of at least EUR1.2 million in the company paying the dividends. In all other cases, 10%. |
| Note (8) | 5% if the beneficial owner is a company that directly holds at least 25% of the capital of the company paying the dividends. In all other cases, 10%. |
| Note (9) | 0% if the beneficial owner is a company directly owning at least 10% of the capital of the company paying the dividends, provided that:
In all other cases, 10%. |
| Note (10) | 5% if for the use of, or for the right to use, any copyright of literary, artistic or scientific work. 10% if for the use of, or for the right to use, any patent, trademark, design or model, plan, secret formula or process In all other cases, 15%. |
| Note (11) | 10% if the recipient is a financial institution or insurance company, or in respect of arm’s-length transactions concerning the sale of equipment, merchandise or services. In all other cases, 15%. |
| Note (12) | 7% if for the use of, or for the right to use, any patent, design or model, plan, secret formula or process. In all other cases, 10%. |
