Hong Kong SAR - Corporate - Withholding taxes (2024)

There is no withholding tax (WHT) on dividends and interest. Royalties received by non-residents (see Royalties in the Income determination section) are subject to a WHT (see the applicable WHT rates for corporations below).

Resident consignees are required to furnish quarterly returns to the HKIRD showing the gross proceeds from sales on behalf of their non-resident consignors and to pay to the CIR a sum equal to 0.5% of such proceeds. The HKIRD normally accepts this as satisfying the Hong Kong tax obligations of the non-resident.

Hong Kong SAR has so far entered into 50 treaties with different jurisdictions. The following table shows the applicable WHT rates for payments made from Hong Kong payers to non-treaty and treaty jurisdiction corporate recipients. The rates shown in the table are the lower of the domestic and treaty rates. For WHT rates on payments received by Hong Kong recipients from treaty jurisdiction payers, please refer to the summaries of the respective treaty jurisdictions. All of the following treaties have been ratified and are effective unless indicated otherwise in the notes below.

Notes

1. Hong Kong SAR does not impose WHT on dividends and interest currently. However, the treaties provide for a maximum WHT rate on dividends and interest should Hong Kong SAR impose such WHT in the future. Some of the treaties also provide for a reduced WHT rate on dividends and interest if conditions specified in the treaties are met.
2. With the introduction of two-tiered profits tax rates, there are two possible sets of domestic WHT rates on royalties paid to non-resident corporations:
1. If the two-tiered tax rates apply, the WHT rates are 2.475% for the first HKD 6.67 million of gross royalty income (i.e. the deemed profit rate of 30% times the tax rate of 8.25% for the first HKD 2 million of assessable profits) and 4.95% for the remaining amount of gross royalty income (i.e. the deemed profit rate of 30% times the tax rate of 16.5% for the remaining amount of assessable profits).
2. If the two-tiered tax rates do not apply, the WHT rate for the whole amount of gross royalty income is 4.95%.

   The 2.475% and 4.95% rates are determined by applying the relevant two-tiered tax rates, which are 8.25% and 16.5%, respectively, on the deemed assessable profits of the royalties. In the normal situation, the deemed assessable profits are 30% of the royalties received by or accrued to a non-resident corporation. Hence, the effective WHT rate on the royalties ranges from 2.475% (when the deemed assessable profits are HKD 2 million or less and the two-tiered tax rates are applicable) to 4.95% (in relation to the deemed assessable profits in excess of HKD 2 million when the two-tiered tax rates are applicable or when the two-tiered tax rates are not applicable).

   In the situation where a person carrying on a trade or business in Hong Kong SAR has, at any time, wholly or partly owned the IP in respect of which the royalties are paid and the non-resident corporation is an associate of the Hong Kong payer, the deemed assessable profits are 100% of the royalties received by or accrued to a non-resident corporation. Hence, the applicable WHT rates are 8.25% for the first HKD 2 million of assessable profits and 16.5% for the remaining amount if the two-tiered tax rates are applicable.

3. The domestic WHT rate on the gross royalty income ranges from 2.475% (when the assessable profits are HKD 2 million or less and the two-tiered tax rates are applicable) to 4.95% (in relation to the assessable profits in excess of HKD 2 million when the two-tiered tax rates are applicable or when the two-tiered tax rates are not applicable), capped at 3% according to the treaty.
4. For payments for the use of, or the right to use, aircraft, the effective WHT rate ranges from 2.475% on the gross payments (when the assessable profits are HKD 2 million or less and the two-tiered tax rates are applicable) to 3% (in relation to the assessable profits in excess of HKD 2 million when the two-tiered tax rates are applicable or when the two-tiered tax rates are not applicable). For other cases, the effective WHT rate on the gross royalty income ranges from 2.475% (when the assessable profits are HKD 2 million or less and the two-tiered tax rates are applicable) to 4.95% (in relation to the assessable profits in excess of HKD 2 million when the two-tiered tax rates are applicable or when the two-tiered tax rates are not applicable).
5. Since a rate specified in the treaty is higher than the domestic WHT rates, the effective WHT rate on the gross royalty income ranges from 2.475% (when the assessable profits are HKD 2 million or less and the two-tiered tax rates are applicable) to 4.95% (in relation to the assessable profits in excess of HKD 2 million when the two-tiered tax rates are applicable or when the two-tiered tax rates are not applicable).
6. The domestic WHT rate on the gross royalty income ranges from 2.475% (when the assessable profits are HKD 2 million or less and the two-tiered tax rates are applicable) to 4.95% (in relation to the assessable profits in excess of HKD 2 million when the two-tiered tax rates are applicable or when the two-tiered tax rates are not applicable), capped at 4% according to the treaty.
7. The 0% rate applies to payments for the use of, or the right to use, industrial, commercial, or scientific equipment or for information concerning industrial, commercial, or scientific experience. For other cases, the WHT rate on the gross royalty income ranges from 2.475% (when the assessable profits are HKD 2 million or less and the two-tiered tax rates are applicable) to 4.95% (in relation to the assessable profits in excess of HKD 2 million when the two-tiered tax rates are applicable or when the two-tiered tax rates are not applicable), capped at 3% according to the treaty.
8. The treaty is pending ratification.
9. The treaty is effective from the year of assessment 2024/25 in Hong Kong SAR.