Hong Kong urges Canadian business to benefit from CDTA

Pact will help cut cost of doing business.

The Hong Kong Economic and Trade Office in Toronto, Canada said the comprehensive avoidance of double taxation agreement (CDTA) between Hong Kong and Canada will help reduce tax burden and the costs for business and investment in both locations.

HKETO Director Gloria Lo encouraged Canadians to leverage the advantages of Hong Kong in venturing into Asia. Speaking at a business networking morning workshop in Toronto, emphasized the advantages of doing business in Hong Kong, which has simple and low tax rates, among other advantages.

The CDTA signed between the Hong Kong and Canada is an incentive to do business in both places.

CDTA ensures that investors will not pay tax twice on a single source of income. It will bring tax savings and a higher degree of certainty on taxation liabilities for Canadian investors when they engage in trade and investment activities with Hong Kong. The agreement will come into force in 2014 after the completion of relevant procedures.

Under the agreement, tax paid in Hong Kong will be allowed as a credit against tax payable in Canada. Any tax paid in Canada by the companies will also be allowed as a credit against the tax payable in Hong Kong in respect of the income, subject to the provisions of the tax laws of Hong Kong. Canadian withholding tax on royalties, interest and dividends will be reduced.