Income Tax agreement Signed Between Canada and Hong Kong

November 13, 2012

• Full text of the Agreement

An Agreement between the Government of Canada and the Government of the Hong Kong Special Administrative Region of the People’s Republic of China for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income was signed on November 11, 2012, in Hong Kong.

The Agreement limits the rate of withholding tax to 5% for dividends paid between companies, to 15% for dividends paid in all other cases, and to 10% for payments of interest and royalties. The Agreement also exempts from withholding tax certain payments of interest.

Consistent with the Government's policy announced in Budget 2007, the Agreement includes provisions reflecting the standard developed by the Organisation for Economic Cooperation and Development for the exchange of tax information.

The Agreement will enter into force once Canada and Hong Kong have notified each other that the procedures required by their laws for the bringing into force of the Agreement have been completed. In Canada, the Agreement will have effect, in respect of tax withheld at source on amounts paid or credited to non-residents, on or after the first day of January in the calendar year following that in which the Agreement enters into force; and, in respect of other taxes, for taxation years beginning on or after the first day of January in the calendar year following that in which the Agreement enters into force.

For further information contact:

Tax Legislation Division
Phone: 613-369-4016