Hong Kong signed a tax agreement with Maldives to avoid double taxation, providing relief for investors, airlines, and shipping companies.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
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On May 26, 2025, Hong Kong entered into a comprehensive avoidance of double taxation agreement ("CDTA") with Maldives, thereby establishing a framework for allocating taxing rights and promoting cross-border economic activities.
This CDTA marks a significant milestone for Hong Kong, as it represents its 52nd such agreement and a notable expansion of its CDTA network, particularly with countries engaged in the Belt and Road Initiative, such as Maldives.
The agreement offers substantial tax relief to Hong Kong companies, enabling them to offset taxes paid in Maldives against their tax liabilities in Hong Kong.
The CDTA provides specific tax relief measures, including: (a) a cap on withholding tax rates for Hong Kong residents on dividends at 5% or 10%, depending on shareholding percentages, (b) exemption of Hong Kong airlines from Maldivian taxes on profits, and (c) a 50% tax reduction in Maldives for profits from international shipping transport earned by Hong Kong residents.
The agreement was officially signed by the Commissioner of Inland Revenue, Mr. Benjamin Chan, and the Commissioner General of Taxation of the Inland Revenue Authority, Mr. Hassan Zareer. Following the completion of ratification procedures, it will come into effect and be available for public review on the Inland Revenue Department's website.
The Asia Initiative, an effort launched by the Global Forum on Transparency and Exchange of Information for Tax Purposes in 2021, seeks to enhance tax transparency and foster regional cooperation. Hong Kong, along with 16 other participating jurisdictions, including Maldives, has joined this initiative.
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