The agreement provides clarity on how taxing rights are allocated between the two jurisdictions, enabling investors to better assess their cross-border tax obligations while preventing double taxation.
Hong Kong’s government has announced that representatives from Barbados and Hong Kong signed a comprehensive income tax treaty on 19 March 2026, marking a step forward in strengthening bilateral economic ties.
The agreement provides clarity on how taxing rights are allocated between the two jurisdictions, enabling investors to better assess their cross-border tax obligations while preventing double taxation. Under the arrangement, Hong Kong residents will be entitled to claim tax credits for taxes paid in Barbados on the same income, in accordance with the Inland Revenue Ordinance.
The treaty applies to a range of taxes in both jurisdictions. In Barbados, it covers income tax, corporation tax, petroleum winning operations tax, and offshore petroleum income tax. In Hong Kong, it applies to profits tax, salaries tax, and property tax.
A key feature of the agreement is the reduction of withholding tax rates. Barbados will exempt dividends paid to Hong Kong residents from the current 5% withholding tax, effectively reducing the rate to 0%. Withholding tax on interest will be capped at 5%. For royalties, a reduced rate of 3% will apply where payments relate to the use of, or the right to use, eligible or qualifying intellectual property as defined under the respective domestic laws; in all other cases, a 5% rate will apply.
Both jurisdictions will adopt the credit method to eliminate double taxation, ensuring that income is not taxed twice.
The treaty will enter into force once both governments complete their respective ratification procedures, including approval by Hong Kong’s Chief Executive in Council and review by the Legislative Council.
