Hong Kong Dividend, Interest, and Royalty Withholding Tax (WHT) Rates for Worldwide Territories
Hong Kong generally does not impose withholding tax on dividends, interest, and royalties paid to residents or non-residents. However, there is an exception for royalty payments.
For royalty payments made to non-resident companies, the withholding tax rate depends on whether the recipient is an associate of the Hong Kong payer and whether a double tax treaty exists between Hong Kong and the recipient's country.
Royalty payments to non-resident associates:
If the recipient is an associate and the Inland Revenue Department (IRD) is satisfied that no person carrying on a business in Hong Kong has ever owned the intellectual property (IP), a reduced withholding tax rate of 4.95% applies.
In other cases, the withholding tax rate is generally 16.5%.
Royalty payments to non-resident non-associates:
A reduced withholding tax rate of 4.95% applies.
Double taxation agreements:
Hong Kong has a network of double tax treaties with many countries. These treaties may override the domestic withholding tax rates and set a lower rate for royalty payments. The specific rate will depend on the terms of the relevant treaty.
For further details and the latest information, it's recommended to consult a tax professional or refer to the Inland Revenue Department (IRD) of Hong Kong https://www.ird.gov.hk/.
How Bestar HK tax professional can Help
Hong Kong Dividend, Interest, and Royalty Withholding Tax (WHT) Rates for Worldwide Territories
Here's how Bestar can help with WHT:
Navigating the Details: Hong Kong's WHT rules have exceptions and specific conditions based on association with the payer and tax treaties. Our tax professional can help assess your situation and determine the exact applicable WHT rate.
Reduced Withholding Tax: As mentioned, a lower withholding tax rate might be applicable depending on your specific case. Bestar can help navigate the requirements to qualify for the reduced rate and ensure proper documentation is in place.
Double Tax Treaty Benefits: If you're a non-resident recipient from a country with a double tax treaty with Hong Kong, the treaty might offer a more favorable WHT rate. Our tax professional can analyze the relevant treaty and advise on claiming any potential benefits.
IRD Communication and Representation: Dealing with the Inland Revenue Department (IRD) can involve forms and procedures. Bestar can handle communication with the IRD on your behalf, ensuring everything is filed correctly and efficiently.
Staying Updated: Tax regulations can change. Our tax professional can stay updated on the latest WHT rules and advise you accordingly.
Overall, Bestar can provide guidance and handle complexities surrounding withholding tax, potentially saving you time, money, and ensuring compliance with Hong Kong tax regulations.
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