Hong Kong and Kyrgyz Republic Enter into Tax Pact
The Secretary for Financial Services and the Treasury, Mr Christopher Hui, held an online bilateral meeting on March 2 with the Minister of Economy and Commerce of the Kyrgyz Republic, Mr Bakyt Tolomushevich Sydykov, and signed a Comprehensive Avoidance of Double Taxation Agreement (CDTA) on behalf of the HKSAR Government.
This agreement marks Hong Kong’s 56th CDTA, reflecting continued efforts to expand the city’s tax treaty network, as highlighted in the 2026–27 Budget. The CDTA clarifies taxing rights, provides tax credits, and reduces withholding tax rates on dividends, interest, and royalties, thereby facilitating cross-border trade and investment.
Under the Comprehensive Avoidance of Double Taxation Agreement (CDTA), any tax paid in the Kyrgyz Republic by Hong Kong residents (including individuals and corporations) in respect of income arising there will be allowed as a credit against the tax payable in Hong Kong on the same income, in accordance with the provisions of the Inland Revenue Ordinance (Cap. 112). This mechanism effectively eliminates double taxation on cross-border income.
With regard to dividends, where a Hong Kong company directly holds at least 20% of the share capital of the dividend-paying company, the withholding tax rate imposed by the Kyrgyz Republic on such dividends will be reduced from the current maximum rate of 10% to 5%. This concession significantly lowers the tax burden on cross-border equity investments.
For interest and royalties received by Hong Kong residents, the maximum withholding tax rate will be reduced from the existing 10% to 8%. These reductions help decrease the cost of cross-border financing and intellectual property transactions, thereby enhancing bilateral trade and investment flows.
The agreement will take effect upon completion of ratification procedures by both parties.
