Agreement on the Avoidance of Double Taxation was signed with Hong Kong, Great Britain and Ireland June 21 in London and June 22 in Dublin, respectively. This comprehensive agreement is already 13th in a row that Hong Kong has concluded with their trading partners. It was signed by the Secretary for Financial Services and the Treasury, Professor KS Chan – Hong Kong on behalf of, the Executive Secretary of the Treasury, David Hayk – on behalf of the UK Minister of Finance, Brian Lenihan, – on behalf of Ireland. The agreement is drawn up in accordance with the provisions of the model double taxation convention, approved by the Organization for Economic Cooperation and Development (OECD). It distributes the tax law between the jurisdictions and establishes reduced tax rates for different types of passive income, income from capital.
Prior to signing the Agreement for the avoidance of double taxation of income of the British and the Irish received in Hong Kong, subject to income tax in Hong Kong, and in the UK or Ireland respectively. British and Irish Revenue companies doing business through its offices in Hong Kong, were taxed in full at both places. In accordance with the agreements, the United Kingdom and Ireland will provide tax credits to its residents and businesses instead of paying the British and Irish tax on such income. Residents of Hong Kong, receiving dividends from UK and Ireland, currently pay tax at a rate of 20% in both places. In Under the agreement, the UK tax rate will drop to 15%, while in Ireland a person would be exempted from paying this tax.