There is no WHT on dividends and interest. Royalties received by non-residents (see Royalties in the Income determination section) are subject to a WHT (see the applicable WHT rates for corporations below).
Resident consignees are required to furnish quarterly returns to the HKIRD showing the gross proceeds from sales on behalf of their non-resident consignors and to pay to the Commissioner of Inland Revenue (CIR) a sum equal to 0.5% of such proceeds. The HKIRD normally accepts this as satisfying the Hong Kong tax obligations of the non-resident.
Hong Kong has so far entered into 40 treaties with different jurisdictions. The following table shows the applicable WHT rates for payments made from Hong Kong payers to non-treaty and treaty country corporate recipients. The rates shown in the table are the lower of the domestic and treaty rates. For WHT rates on payments received by Hong Kong recipients from treaty country payers, please refer to the summaries of the respective treaty countries.
The 2.475% and 4.95% rates are determined by applying the relevant two-tier rates, which are 8.25% and 16.5%, respectively, on the deemed assessable profits of the royalties. In the normal situation, the deemed assessable profits are 30% of the royalties received by or accrued to a non-resident corporation. Hence, the effective WHT rate ranges from 2.475% (when the assessable profits are HKD 2 million or less and the two-tier rates are applicable) to 4.95% (applies to the assessable profits in excess of HKD 2 million when the two-tier rates are applicable or when the two-tier rates are not applicable).
In the situation where a person carrying on a trade or business in Hong Kong has, at any time, wholly or partly owned the IP in respect of which the royalties are paid and the non-resident corporation is an associate of the Hong Kong payer, the deemed assessable profits are 100% of the royalties received by or accrued to a non-resident corporation. Hence, the applicable WHT rates are 8.25% for the first HKD 2 million of assessable profits and 16.5% for the remaining amount if the two-tier rates are applicable.
Last Reviewed - 27 June 2018