Understanding Dividend

DividendDividends in Hong Kong serve as a mechanism for companies to distribute profits to shareholders, commonly disbursed through cash payments. The frequency of these payments can vary, ranging from monthly to quarterly or annually.

The treatment of dividends in Hong Kong is governed by a free-market policy, allowing unrestricted remittance or conversion of dividends from direct investments in the city. The jurisdiction has entered into double tax treaties, offering preferential withholding tax rates for dividends in specific scenarios, particularly between qualifying companies with a permanent establishment in both Hong Kong and the respective jurisdiction.

Unlike some jurisdictions, Hong Kong does not impose a dividend withholding tax. However, businesses are subject to other taxes, including corporate income tax and stamp duty. When companies distribute dividends, a cash entitlement announcement protocol is followed, ensuring shareholders are informed about payment details, including currency and taxation aspects.