Russia, Hong Kong sign avoidance of double taxation agreement
Russia and the Hong Kong Special Administrative Region of the People’s Republic of China signed an agreement on avoidance of double taxation and prevention of fiscal evasion regarding profits taxes on Monday.
The document was signed by Russia’s State Secretary, Deputy Finance Minister Yuriy Zubarev and the Secretary for Financial Services and the Treasury in the Government of Hong Kong Ceajer Chan Ka-keung. The signing ceremony was attended by Russia’s Deputy Prime Minister Arkady Dvorkovich. The document was signed by Russia’s State Secretary, Deputy Finance Minister Yuriy Zubarev and the Secretary for Financial Services and the Treasury in the Government of Hong Kong Ceajer Chan Ka-keung.
The signing ceremony was attended by Russia’s Deputy Prime Minister Arkady Dvorkovich. Many companies prefer to work in China via Hong Kong and to list on the Hong Kong Exchange for raising capital. The aluminum producer Rusal owned by Oleg Deripaska is the biggest issuer on the Hong Kong Exchange among Russian firms.
The agreement “will substantially raise attractiveness of investing in Russian assets for numerous Asian and Western investors acting under the Special Administrative Region’ jurisdiction,” Russia’s Consul General in Hong Kong Alexander Kozlov told TASS, adding that the agreement “will allow to remove the obligation to keep a number of taxes on payments of “passive” incomes to Hong Kong investors by Russian companies in the Russian Federation.”
“Besides, taking into consideration the requirements set by the legislation of the Russian Federation regarding the order of placement of securities by the Russian companies on foreign stock exchanges, the agreement on avoidance of double taxation with the Special Administrative Region will allow to create so-called Special Purpose Vehicle directly under the Hong Kong jurisdiction,” Kozlov said.
The agreement is aimed at solving the problems of taxation of business profits, earnings from using property, maritime transport and air conveyance, passive incomes (dividends, interest and royalties) as well as personal incomes. As follows from the agreement profit tax will be slashed to zero for the source while tax on dividends will stand at 5%. Earlier Russia signed similar agreements with China and Singapore.
“The signing of the agreement with Hong Kong is another stage of development of cooperation with countries of the Asian-Pacific region in financial area,” Deputy Economic Development Minister Stanislav Voskresensky who heads the working group on promoting Russia’s interests, said.