Hong Kong Signs DTA, Creating Investment Pact with Bahrain
Hong Kong has expanded its avoidance of double taxation agreements, onboarding Bahrain as its latest investment partner. Both parties signed a comprehensive avoidance of double taxation agreement (DTA), the 49th DTA to be concluded in Hong Kong.
With the agreement, Hong Kong companies paying tax in Bahrain, whether through deduction or direct pay, can enjoy tax relief that is payable in Hong Kong for the same income as long as they comply with the DTA, subject to Hong Kong tax laws provisions.
Bahrain is one of the economies participating in the Belt & Road Initiative, and by signing the DTA with Hong Kong, the Secretary for Financial Services & the Treasury for Hong Kong SAR is confident the agreement will boost economic and trade connections between both parties. Besides enjoying tax relief, the agreement will incentivise the corporate sectors on both sides to engage in transactions or investments.
To strengthen its position as a global hub for trade and commerce, Hong Kong will pursue negotiations with trading and investment partners to broaden the scope of its DTA network.
Similarly, Hong Kong signed The Investment Promotion and Protection Agreement (IPPA), an investment pact with Bahrain that will boost investor confidence, increase investment flows, and develop economic and trade ties.
What’s in the Agreement?
By the IPPA, Bahrain and Hong Kong agree to treat the other party’s investors fairly, equally, and without discrimination. They also agree to compensate investors whose interests are expropriated and enable them the freedom to transfer their investments and profits to other countries without restriction. Additionally, it offers the application of globally recognised norms for resolving investment disputes.
Hong Kong considers the IPPA a milestone in strengthening investment links between the parties. The pact will become effective once both sides resolve their relevant internal procedures.
An IPPA increases investors’ confidence in making foreign investments by allowing investors of both sides to benefit from comparable protection of their interests in the host economy.
The high-level visit led by the Chief Executive to the region in February of last year heralded the Hong Kong SAR Government’s commitment to the continuous expansion of economic ties with Middle Eastern economies, as evidenced by the signing of the IPPA.
Bahrain on the Hong Kong’s Dedicated Fund
To further assist the city’s firms in growing there, Hong Kong has included Bahrain in the geographic scope of Hong Kong’s Dedicated Fund on Branding, Upgrading, & Domestic Sales as of the signing of the Hong Kong-Bahrain IPPA.
Both the DTA & IPPA between Hong Kong and Bahrain were signed by Hong Kong’s Secretary for Commerce & Economic Development, Algernon Yau, and Bahrain’s Finance and National Economy Minister, Shaikh Salman bin Khalifa Al Khalifa, in Manama, Bahrain.
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