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On November 11, 2012 Canada and Hong Kong dually signed a tax treaty outlining some new provisions related to cross border investing between the two countries.

The main provisions of the treaty are as follows:

  • Withholding rates on dividends from companies that control directly or indirectly at least 10% of the voting power of the company will be 5%. A 15% rate apply to all other dividends.
  • A 10% withholding rate applies to all related party interest. Non-related interest (arm’s length interest remains exempt).
  • Withholding on royalty income of 10%.
  • Capital gains are only taxable to the source country if more than 50% of the value of the immoveable property is located in that source state.
  • General anti-avoidance and anti-treaty shopping provisions are included.
  • General “exchange of information” article between the two countries are also included.

If you have any questions about the new treaty between Canada and Hong Kong please give us a call at 250-381-2400.

 

Phil Hogan

Phil Hogan is a Canadian and US CPA working with clients throughout Canada and the US. Phil advises on cross border tax and financial planning matters. Phil can be reached at phil@hutcheson.ca or via telephone at 250-661-9417. You can also read more about Phil at Hutcheson.ca/phil.
Phil Hogan

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Philip Hogan

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The information contained in this article is for general use only and should not be viewed as professional advice. Accounting and tax rules and regulations regularly change and individuals should contact a competent professional to obtain accounting and tax advice based on their specific situation.

Phil Hogan

Phil Hogan is a Canadian and US CPA working with clients throughout Canada and the US. Phil advises on cross border tax and financial planning matters. Phil can be reached at phil@hutcheson.ca or via telephone at 250-661-9417. You can also read more about Phil at Hutcheson.ca/phil.
Phil Hogan

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