Italy, Hong Kong sign DTA

Pact also allows for the exchange of information to prevent tax evasion.

Hong Kong and Italy recently signed a comprehensive Double Taxation Agreement (DTA) that provides a legal basis for allocating taxing rights between the two jurisdictions.

The DT allows Italian residents to credit taxes paid in Hong Kong for Hong Kong -derived income against tax payable in Italy. Hong Kong companies doing business through a permanent establishment in Italy can deduct taxes paid in Italy against tax payable in Hong Kong.

The DTA also reduces Italy’s withholding tax rates on interests, royalties and dividends received by HK residents from 20%, 22.5% and 20% to 12.5%, 15% and 10%, respectively.

An exchange of information article has also been incorporated into the DTA to prevent tax evasion. This article entitles the two jurisdictions to request tax-related information from each other.

The comprehensive DTA will come into effect after the completion of ratification procedures on both sides.

Hong Kong has comprehensive DTAs with Belgium, Thailand, Mainland China, Luxembourg, Vietnam, Brunei, the Netherlands, Indonesia, Hungary, Kuwait, Austria, the United Kingdom, Ireland, Liechtenstein, France, Japan, New Zealand, Portugal, Spain, the Czech Republic, Switzerland, Malta, Jersey, Malaysia, Mexico and Canada.