Hong Kong and Pakistan have signed a comprehensive agreement for the avoidance of double taxation.
Secretary for Financial Services & the Treasury Prof KC Chan and Pakistan's Ambassador for China Masood Khalid signed the agreement today.
The document sets out the allocation of taxing rights between the two jurisdictions which will help investors better assess their potential tax liabilities from cross-boundary economic activities.
It is the 37th tax agreement Hong Kong has signed with its trading partners.
Under it, any Pakistan tax paid by Hong Kong companies will be allowed as a credit against the tax payable in Hong Kong on the same profits, subject to the provisions of Hong Kong tax laws.
For Pakistani companies, the tax they pay in Hong Kong will be allowed as a credit against the tax payable on the same income in Pakistan.
The agreement will come into force after the completion of ratification procedures on both sides.
For Hong Kong, it will be implemented by an order to be made by the Chief Executive in Council under the Inland Revenue Ordinance, subject to Legislative Council vetting.
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