Hong Kong signed, on 26 June 2019, a comprehensive income tax treaty with Cambodia (the Treaty).
The key provisions of the Treaty are highlighted below.
Promoting trade and investment
The Treaty contains provisions which reduce or eliminate withholding taxes on certain passive income between the two jurisdictions.
The following table summarizes the applicable withholding rates for passive income when received from Cambodia by a Hong Kong resident as beneficial owner.1
| Passive income | Dividends | Interest | Royalties | Fees for technical services | Capital gains on disposal of shares |
| Tax Rate | |||||
| Normal withholding rate for companies | 14% | 14% | 14% | 14% | 20% |
| Reduced rate under the Treaty | 10% | 0/10%2 | 10% | 10% | 0%3 |
Avoidance of double taxation
Where the income of a Hong Kong resident is subject to tax in both Hong Kong and Cambodia, the Hong Kong resident can credit the tax paid in Cambodia against the Hong Kong tax liability arising on the same income. The available tax credit is, however, limited to the Hong Kong tax imposed on the same income.
Effective date of the Treaty
The Treaty will enter into force in the tax year following the calendar year in which the ratification procedures are completed by both jurisdictions. Assuming the ratification procedures are completed in 2019, the Treaty will become effective as follows:
- Hong Kong: for any year of assessment beginning on or after April 2020
- Cambodia: for any income year beginning on or after 1 January 2020
