Hong Kong’s Financial Services and the Treasury Bureau (FSTB) has confirmed that dividends paid to Hong Kong investors by companies in mainland China will be subjected to a 10% withholding tax.
It was disclosed that Hong Kong’s government has received a reply from China’s State Administration of Taxation (SAT) that clarified the arrangements concerning the tax payable to the Mainland for dividends paid by Mainland companies to individual investors in Hong Kong.
A spokesman for the Financial Services and the Treasury Bureau said: "SAT’s reply notes that when non-foreign investment companies of the Mainland which are listed in Hong Kong distribute dividends to their shareholders, the individual shareholders in general will be subject to a withholding tax rate of 10% with reference to the arrangement for the avoidance of double taxation signed between Mainland China and Hong Kong. They do not have to make any applications for entitlement to the above-mentioned tax rate.”
It was added that: "For shareholders who are residents of other countries, and whose home countries have reached an agreement with China on an applicable withholding tax rate higher or lower than 10%, they have to follow the bilateral tax agreement in paying tax in connection with dividends paid by Mainland companies listed in Hong Kong."
The spokesman said that the Stock Exchange of Hong Kong will issue a letter to listed companies to inform them of the above-mentioned tax arrangements concerning dividends paid by Mainland companies.
A comprehensive report in our Intelligence Report series giving a country-by-country analysis of offshore investment funds, stock exchanges and trusts, with an analysis of the US QI regime, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report9.aspTags: tax | law | investment | agreements | equity investment | double tax agreement (DTA) | tax rates | withholding tax | China | Hong Kong | dividends | Hong Kong | China
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