Double Taxation Agreement between Latvia and Hong Kong
Recently agreement was made between the Government of the Republic of Latvia and the Government of the Hong Kong Special Administrative region of the People's Republic of China for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income (further Agreement). The provisions of this Agreement come into force from January, 2017.
The Agreement defines several aspects that regulate the double taxation in Latvia and Hong Kong (further below referred to as Parties), such as: what is resident, permanent representation, income, profit etc. within the meaning of this contract.
Taxation of Dividends in Latvia and Hong Kong
The Agreement defines that in case where the company of one Party pays dividends to the other Party of this Agreement may be taxed in the other party's state. Dividends may be taxed also in that state where is the company which pays the dividends; however, if the other Party is benefiting these dividends may be taxed as follows:
- 0% if the benefiter is a company itself;
- 10% in all other cases.
Taxation of Interest in Latvia and Hong Kong
Interest that has originated in one Party's state and is being paid out in the other Party’s state may be taxed in the other state. Interest may be taxed also in the state where they have originated; however, if the benefiter is a Party of other state the interest may be taxed as follows:
- 0% if the interest is paid by one Party to the other Party, which is the benefiter of this interest;
- 10% in all other cases.
Taxation of Royalties in Latvia and Hong Kong
Royalties that have originated in one Party's state and is being paid out in the other Party’s state may be taxed in the other state. Royalties may be taxed also in the state where they have originated; however, if the benefiter is a Party of other state the royalties may be taxed as follows:
- 0% if the royalties for the use of industrial, commercial or scientific equipment or information about their experience are paid by one Party to the other Party, which is the benefiter of these royalties;
- 3% in all other cases.
Double taxation in Latvia
If the resident of Latvia has an income that may be taxed in Hong Kong, the tax in Latvia for the same income may be reduced by the same amount that has been paid in Hong Kong, if the national Tax law of Latvia does not provide more beneficial rules for the specific situation.
To find out more about the double taxation in Latvia, please contact our English speaking lawyers at info@gencs.eu.