On the 18 of January 2015, Kong Kong and Russia signed a comprehensive Double Taxation Agreement (DTA). The DTA is intended to validate the allocation of tax rights between the two countries and enable businesses and investors to assess the incidence of taxation on their cross-border transactions.
In accordance to the provisions of the DTA, any tax paid in Russia will be allowed as tax credit against income in Hong Kong, subject to the provisions of the tax law in Hong Kong. Moreover, the DTA provides that a Russian individual who pays Hong Kong Tax on Hong Kong income, will be entitled to claim a tax credit on that income in Russia.
According to the provisions of the treaty, the following withholding taxes will apply:
Dividends:
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5% if the beneficial owner of the dividend is a company (other than partnership) which holds directly a minimum of 15% of the capital of the company paying the dividends;
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10% in all other cases
Interest: 0%
Royalties: 3%
The DTA also provides for the mutual exchange of information between the two jurisdictions in order to increase tax transparency in and fight tax evasion. The DTA will enter info effect following ratification of the DTA in accordance to the domestic law of each state and it is expected to be completed later this year.
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