HK, Macau reach pact to avoid double taxation
China’s special administrative regions of Hong Kong and Macau have signed a comprehensive avoidance of double taxation arrangement, the government of Hong Kong Special Administrative Region said yesterday.
Under the arrangement, any Macau tax paid by Hong Kong residents in respect of income derived from sources in Macau will be allowed as a credit against the Hong Kong tax payable on the same income, subject to the provisions of the tax laws of Hong Kong, a spokesman for the HKSAR government said.
For Macau residents, double taxation will be avoided by way of exemption of the income taxed in Hong Kong from the Macau tax, or by crediting the Hong Kong tax paid against the Macau tax payable in respect of the same income.
The spokesman said the arrangement will help deepen the economic and trade ties between Hong Kong and Macau, offer additional incentives for the business sector of both sides to do business and invest, promote nurturing and exchanges of talents, and further drive the development of the Guangdong-Hong Kong-Macau Greater Bay Area.
The arrangement also provides other tax relief arrangements.
Profits earned by Hong Kong residents in Macau from cross-boundary shipping, air and land transport will not be taxed in Macau.
An eligible teacher or researcher who is employed in Hong Kong and engages in teaching and research activities at a recognized educational or scientific research institution in Macau shall be exempt from tax in Macau for a period of three years, provided that the relevant income has been subject to tax in Hong Kong.
The arrangement will come into force after the completion of ratification procedures by both sides, the spokesman added.
In 2018, Macau was Hong Kong’s 19th largest trading partner. Following the conclusion of the arrangement between Hong Kong and Macau, Hong Kong has signed relevant agreements with 14 of its top 20 trading partners.