On 30 August 2023, the Secretary for Financial Services and the Treasury, Mr Christopher Hui, on behalf of the Hong Kong Special Administrative Region Government signed a comprehensive avoidance of double taxation agreement (CDTA) with Bangladesh. The signing took place in Hong Kong. Representing the Government of Bangladesh was the Senior Secretary of the Internal Resources Division and Chairman of the National Board of Revenue of the Ministry of Finance of Bangladesh, Mr Abu Hena Md. Rahmatul Muneem, who was accompanied by the Consul-General of Bangladesh in Hong Kong, Ms Israt Ara.
This CDTA is the 47th agreement that Hong Kong has concluded. It sets out the allocation of taxing rights between the two jurisdictions and will help investors better assess their potential tax liabilities from cross-border economic activities.
Under the Hong Kong-Bangladesh CDTA, Hong Kong companies can enjoy double taxation relief in that any tax paid in Bangladesh, whether directly or by deduction, in accordance with the CDTA 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 tax laws of Hong Kong.
Moreover, the Hong Kong-Bangladesh CDTA also provides the following tax relief arrangements:
(a) Bangladesh’s withholding tax rates for Hong Kong residents on dividends will be capped at 10 percent or 15 percent (depending on the percentage of their shareholdings); and on interest, royalties and fees for technical services will be capped at 10 percent; and
(b) Hong Kong residents deriving profits from international shipping transport in Bangladesh will enjoy 50 percent tax reduction in Bangladesh in respect of the profits subject to tax there.
This CDTA will come into force after the completion of ratification procedures by both jurisdictions. In the case of Hong Kong, it will be implemented by way of an order to be made by the Chief Executive in Council under the Inland Revenue Ordinance (Cap. 112). The order is subject to negative vetting by the Legislative Council.