2019 28 June

Cambodia Tax Update: Tax Treaty with Hong Kong Signed


Cambodia has signed a Double Taxation Agreement (DTA) with Hong Kong on the 26th of June 2019 as announced by the Secretary for Financial Services and Treasury, Mr James Lau, on behalf of the Hong Kong Special Administrative Region Government.

Under the DTA, double taxation will be avoided in that any tax paid in Cambodia by Hong Kong companies in accordance with the DTA will be allowed as a credit against the tax payable in Hong Kong on the same income, subject to the provisions of the tax laws of Hong Kong. Likewise, for Cambodian companies, the tax paid in Hong Kong will be allowed as a deduction from the tax payable on the same income in Cambodia.

The Hong Kong-Cambodia DTA also provides the following tax relief arrangements:

(a) Cambodia’s withholding tax rates for Hong Kong tax residents on dividends, interest, royalties and fees for technical services will be reduced from the current level of 14% to 10%;

(b) Hong Kong airlines operating flights to and from Cambodia will be taxed at Hong Kong’s corporate tax rate, and will not be subjected to tax on income in Cambodia; and 

(c) Hong Kong residents deriving profits from international shipping transport in Cambodia will enjoy a 50% reduction in tax on income in Cambodia in respect of the profits subject to tax there.

The DTA has also incorporated an article on exchange of information between the two jurisdictions to make it easier for the respective tax authorities to track acts of tax evasion.

The DTA will come into force after the completion of ratification procedures by both jurisdictions.
The DFDL tax team has a vast and varied depth of experience with regard to the application of tax treaties, and as always, we stand ready to answer any questions that you may have on this and other tax issues of concern.

Tax services required to be undertaken by a licensed tax agent in Cambodia are provided by Mekong Tax Services Co., Ltd, a member of DFDL and licensed as a Cambodian tax agent under license number – TA201701018.

The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.

DFDL Contact

Clint O’Connell
Head of Cambodia Tax Practice

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