Hong Kong and Kyrgyzstan Sign Tax Agreement to Avoid Double Taxation

Hong Kong's government has signed a comprehensive agreement with the government of the Kyrgyz Republic to prevent double taxation, marking Hong Kong's 56th such agreement. According to RTHK, the agreement allows Hong Kong residents to offset taxes paid in the Kyrgyz Republic against taxes on the same income in Hong Kong under the Inland Revenue Ordinance (Chapter 112). Additionally, if a Hong Kong company holds at least 20% of the shares in a Kyrgyz company, the withholding tax rate on dividends will be reduced from a maximum of 10% to 5%. The maximum withholding tax rate on interest and royalties for Hong Kong residents will decrease from 10% to 8%. The agreement will come into effect after both parties complete the necessary approval procedures. The Chief Executive in Council will make an order under the Inland Revenue Ordinance regarding the agreement, which will be submitted to the Legislative Council for review through a negative vetting procedure. Christopher Hui, Secretary for Financial Services and the Treasury, held an online bilateral meeting with the Minister of Economy and Commerce of the Kyrgyz Republic today. During the meeting, Hui highlighted Hong Kong's strengths and recent developments as an international financial center, including efforts to establish Hong Kong as a regional gold reserve hub. Hui also signed the agreement on behalf of the Hong Kong government. Hui stated that the new fiscal budget indicates the government's ongoing efforts to expand its network of agreements. The agreement clarifies the taxation rights between Hong Kong and the Kyrgyz Republic, enabling investors to better assess potential tax burdens on cross-border economic activities and avoid double taxation. This is expected to create a more attractive business environment and promote bilateral trade and investment. The government will continue to actively seek agreements with more tax jurisdictions to enhance Hong Kong's appeal as a business and investment hub, thereby solidifying its status as an international economic and trade center.