To avoid double taxation (CDTA) with Russia the comprehensive agreement was signed between Secretary for Financial Services & the Treasury Prof KC Chan and Russia's State Secretary and Deputy Minister of Finance Yuriy Zubarev. This document signifies the Government's ongoing efforts to expand its CDTA network, particularly with Belt & Road economies.
It is the 34th CDTA Hong Kong has signed with its trading partners, Prof Chan said, adding that it clearly sets out the allocation of taxing rights between the two jurisdictions and will help investors better assess their potential tax liabilities from cross-border economic activities.
Under the agreement Russia's withholding tax rate on royalties, currently at 20% for companies or 30% for individuals, will be capped at 3%. Russia's dividend withholding tax rate on Hong Kong residents will be reduced from the current rate of 15% to 5% or 10%, depending on the percentage of their shareholdings.
Hong Kong airlines operating flights to Russia will not be taxed in Russia and will be taxed at Hong Kong's corporation tax rate. Profits from international shipping transport earned by Hong Kong residents that arise in Russia, which are currently subject to tax there, will not be taxed in Russia under the agreement.
The deal will come into force after the completion of ratification procedures on both sides. In the case of Hong Kong, it will be implemented by way of an order to be made by the Chief Executive in Council under the Inland Revenue Ordinance.
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