In a bid to facilitate better investor access, Cambodia and Hong Kong on Wednesday agreed to sign a document to avoid double taxation in cross-border economic activities.
According to a Hong Kong government press release, Finance Minister Aun Pornmoniroth and James Lau, Hong Kong’s Secretary for Financial Services and Treasury, signed the Comprehensive Double Taxation Avoidance agreement.
The agreement will come into effect after the completion of ratification procedures by Hong Kong and Cambodia, the release said.
It said that the CDTA agreement aims to benefit Hong Kong and Cambodia.
“Double taxation will be avoided in that any tax paid in Cambodia by Hong Kong companies in accordance with the CDTA will be allowed as a credit against the tax payable in Hong Kong on the same income, [which is] subject to the provisions of Hong Kong tax laws,” it said. “Likewise, for Cambodian companies, the tax paid in Hong Kong will be allowed as a deduction from the tax payable on the same income in Cambodia.”
It said that the agreement will also provide several tax relief arrangements and has incorporated an article on exchange of information, which enables Hong Kong to fulfil its international obligations on enhancing tax transparency and combatting tax evasion.
Mr James, who signed the agreement on behalf of Hong Kong, said Cambodia was its 38th largest trading partner last year.
“We have all along treasured our economic and trade ties with Cambodia and I have every confidence that this agreement will encourage more bilateral investments and bring our cooperation to a new level,” he said.
Last year, Cambodia reached a CDTA agreement with Singapore and in 2017, Cambodia signed the same agreement with Thailand.