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Canada signs new tax treaty with Hong Kong

Published by Stephanie Brooks on November 12, 2012

Prime Minister Stephen Harper and Leung Chun-ying, chief executive of the Hong Kong Special Administrative Region, announced a new tax treaty on November 11 that will aim to increase trade and investment between both economies.

Prime Minister Harper said the treaty will reduce tax barriers between the two markets. “This will increase trade and investment flows while reducing incidents of double taxation and tax evasion,” he stated.  

The agreement will ensure the rates of withholding taxes that apply on certain cross-border payments will be reduced, as well as the elimination of double taxation for those who do business in the other economy.  

CME President & CEO, Jayson Myers, who accompanied the prime minister’s business delegation to Asia recently and had been a long-time advocate of the conclusion of this tax treaty, concurs with the two leaders in their quest for improved business efficiencies between the two economies. Hong Kong holds tremendous potential for Canadian businesses looking to establish a strong presence in China and indeed across all of Asia, and this Agreement will help fulfill this potential.

Myers says Hong Kong is a pivotal commercial centre for Canada because of its history and close ties with Canadians, its Closer Economic Partnership Arrangement with mainland China, its role as regional headquarters for businesses operating in the region, and the expertise it provides to firms looking to grow in the region. "The conclusion of this Double Taxation Agreement reduces barriers to two-way trade and investment between Canada and Hong Kong," he explains, "by preventing the double taxation of income, assets and transactions, streamlining taxation procedures, and improving investment conditions between Canada and Hong Kong.”

This will become the 91st tax treaty Canada has with other countries. The treaty will become effective once it has been ratified by both Canada and Hong Kong. 

The full text of the Agreement is available at: http://www.fin.gc.ca/treaties-conventions/hongkong-eng.asp.

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