Secretary for Financial Services & the Treasury Christopher Hui today signed a comprehensive avoidance of double taxation agreement (CDTA) with Croatia on behalf of the Hong Kong Special Administrative Region Government.

The agreement, signed in Hong Kong, sets out the allocation of taxing rights between the two jurisdictions and will help investors better assess their potential tax liabilities from cross-boundary economic activities.

Noting that Croatia is one of the economies participating in the Belt & Road Initiative, Mr Hui said he is confident that the agreement will further promote economic and trade connections between Hong Kong and Croatia, and offer additional incentives for the business sectors of both sides to do business or make investments.

He added: “Hong Kong will continue to negotiate with trading and investment partners with a view to expanding its CDTA network. This could enhance the attractiveness of Hong Kong as a business and investment hub, and consolidate the city's status as an international economic and trade centre.”

Under the Hong Kong-Croatia agreement, Hong Kong companies can enjoy double taxation relief in that any tax paid in Croatia, whether directly or by deduction, will be allowed as a credit against the tax payable in Hong Kong in respect of the same income, subject to the provisions of Hong Kong’s tax laws.

Moreover, the agreement also provides certain tax relief arrangements such as Croatia's withholding tax rates for Hong Kong residents on dividends, interest and royalties will be capped at 5%; and profits from international shipping transport earned by Hong Kong residents arising in Croatia will not be taxed in Croatia.

Click here for more on the agreement.