Malaysian Minister of Finance II Ahmad Husni Mohamad Hanadzlah and Financial Secretary John Tsang sign a tax agreement in Kuala Lumpur.
HK, Malaysia sign tax pact
April 25, 2012
Financial Secretary John Tsang today signed an agreement with Malaysia for the avoidance of double taxation and the prevention of tax evasion.
He signed the deal with Minister of Finance II Ahmad Husni Mohamad Hanadzlah in Kuala Lumpur.
It is Hong Kong's 24th comprehensive tax agreement.
Mr Tsang said it will further strengthen the bilateral relationship by encouraging the flow of investment and talent between the two places.
Under the agreement, any Malaysian tax paid by Hong Kong companies doing business in Malaysia will be allowed as credit against the tax payable in Hong Kong in respect of the income.
The Malaysian withholding tax rate on Hong Kong residents receiving interest from Malaysia, which is now 15%, will be capped at 10%.
The Malaysian withholding tax on royalties will also be capped at 8%. The Malaysian withholding tax on fees for technical services, currently at 10%, will be capped at 5%.
Hong Kong airlines operating flights to Malaysia will be taxed at Hong Kong's corporate tax rate. Hong Kong residents’ profits from international shipping transport earned in Malaysia will not be taxed in the country.
The agreement will be effective after the completion of ratification procedures on both sides.