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1. DOUBLE TAXATION ARRANGEMENT ("DTA") BETWEEN HONG KONG AND OVERSEAS JURISDICTIONS
1.1 DTA WITH BELGIUM
Has extensive double tax arrangement between HKSAR and Belgium; under OECD model, the exchange of information between tax authorities, restricts to the commercial purposes are permitted between tax authorities of the jurisdictions concerned,
Benefits under the new DTA:
- Elimination of capital gain on disposal of shares:
- The elimination of tax on dividend paid if:
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The Belgium intermediate holding co. has held at least certain percentage of shares and for certain period, the dividend, royalty, interest declared from HK to such intermediate holding co, and the ultimate holding co incorporated in the members of European Union countries can be entitled to be exempt from being taxed
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- The tax rate imposed on royalty is reduced:
So a corporate structure planning for both the outbound and inbound investment is essential to achieve the goal to mitigate the tax burden on those income received.
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