Hong Kong signed its 58th Comprehensive Double Taxation Agreement with Cyprus on 12 June 2026, reducing withholding tax on royalties from 10% to 3% for Hong Kong residents and strengthening trade ties with the Belt and Road Initiative participant.
Hong Kong’s Secretary for Financial Services and the Treasury, Mr Christopher Hui, had a bilateral meeting with the Ambassador of the Republic of Cyprus to China, Ms Koula Sophianou, in Hong Kong on 12 June 2026 and signed on behalf of the Hong Kong Special Administrative Region (HKSAR) Government a comprehensive avoidance of double taxation agreement (CDTA) with the Government of Cyprus.
The agreement with Cyprus, a Belt and Road Initiative participant, brings the current administration’s CDTA total to 13, underscoring its commitment to position Hong Kong as a preferred investment destination.
The new CDTA announcement aligns with Hong Kong’s recently unveiled Action Plan to Promote the Development of Corporate Treasury Centres, a strategic initiative designed to cement the city’s role as a major hub for corporate finance operations. The agreement provides clear guidance on tax allocation between the two jurisdictions, allowing investors to forecast their cross-border tax obligations with greater certainty.
By eliminating double taxation barriers, the CDTA is expected to facilitate deeper commercial ties between Hong Kong and Cyprus. The arrangement enables Hong Kong-based enterprises to expand operations across Belt and Road economies with improved tax predictability, a critical factor for international investment decisions. Officials highlighted that continued CDTA expansion remains central to Hong Kong’s broader agenda of leveraging its position as the world’s largest cross-boundary wealth management centre and its emerging strength in international gold trading.
In accordance with this CDTA, any tax paid by Hong Kong residents in Cyprus will be allowed as a credit against the tax payable in Hong Kong in respect of the same income, subject to the provisions of the Inland Revenue Ordinance (Cap. 112) (IRO). Moreover, Cyprus’ withholding tax rates for Hong Kong residents on royalties, currently at up to 10%, will be reduced to 3%.
The CDTA will come into force after completion of ratification procedures by both sides. In Hong Kong, the Chief Executive in Council will make an order under the IRO, which will be tabled at the Legislative Council for negative vetting.
