HK and South Korea sign DTA

On July 8, Hong Kong’s Secretary for Financial Services and the Treasury, Professor K C Chan, and the South Korean Consul-General in Hong Kong, Cho Yong-chun, signed a comprehensive double taxation agreement between Hong Kong and South Korea (DTA) on behalf of the two jurisdictions. 

To welcome the agreement, Chan said that it sets out clearly the allocation of taxing rights between the Hong Kong and South Korea, so that investors should be able to better assess their potential tax liabilities from cross-border economic activities, and that it should thereby offer added incentives for South Korean companies to do business or invest in Hong Kong, and vice versa.

In the absence of this DTA, income earned by South Korean residents in Hong Kong is subject to both Hong Kong and South Korean income tax, while, under the agreement, tax paid in Hong Kong will be allowed as a credit against tax payable in South Korea.

The new agreement will come into force after the completion of ratification procedures on both sides.It should be noted that the document represents the 30th DTA that Hong Kong has concluded with its trading partners.