Hong Kong and Cyprus enter into tax pact (with photos)

On 12 Jun 2026, the Secretary for Financial Services and the Treasury, Mr Christopher Hui, convened a bilateral meeting with Ms Koula Sophianou, Ambassador of the Republic of Cyprus to China, in Hong Kong. Mr Hui executed a comprehensive avoidance of double taxation agreement ("CDTA") on behalf of the Hong Kong Special Administrative Region ("HKSAR") Government with the Government of Cyprus.

Strategic Context and Government Objectives

This agreement represents the 58th CDTA concluded by Hong Kong, marking the third such instrument finalized this year. To date, the current-term Government has signed 13 CDTAs, reflecting a key strategy within the Action Plan to Promote the Development of Corporate Treasury Centres in Hong Kong announced this week.

Economic Framework and Tax Allocation

Mr Hui highlighted Hong Kong’s status as the world’s largest cross-boundary wealth management centre and an emerging international gold trading market. Cyprus, a participant in the Belt and Road Initiative and a key European trading partner, engages in this CDTA to allocate taxing rights between the two jurisdictions to avoid double taxation.

Taxation Mechanisms and Relief

Under the CDTA, tax paid by Hong Kong residents in Cyprus is creditable against Hong Kong tax liabilities on the same income, subject to the Inland Revenue Ordinance (Cap. 112) ("IRO"). Furthermore, Cyprus withholding tax rates on royalties for Hong Kong residents will be reduced from up to 10 per cent to 3 per cent.

Implementation and Ratification

The CDTA shall enter into force following ratification procedures by both parties. In Hong Kong, the Chief Executive in Council will make an order under the IRO, which will be tabled at the Legislative Council for negative vetting. Details are available on the Inland Revenue Department’s website.