Orbitax subscribers can now easily follow the latest COVID-19-related tax measures being implemented worldwide. New to Orbitax? Create a free account to access your dashboard and latest tax news.
News Share

The Tax Hub

Daily Tax Newsletter

Hong Kong

Responsive image

Hong Kong Revises Practice Notes on Deduction of Foreign Taxes

The Hong Kong Inland Revenue Department has published a revised version of Departmental Interpretation and Practice Notes (DIPN) No. 28 on provisions relating to foreign tax deduction. The revisions were made in light of Inland Revenue (Amendment) (No. 6) Ordinance 2018, which was published in the Official Gazette in July 2018 (previous coverage).

The main revisions to DIPN No. 28 concern the enactment of section 16(2J), which provides that with effect from the year of assessment 2018/19, unilateral relief from double taxation (tax deduction) provided under section 16(1)(c) is not available in relation to any tax paid in a territory if:

  • the territory is a double taxation agreement (DTA) territory; and
  • under section 50, tax payable in the territory by a Hong Kong resident person in respect of the profits is to be allowed as a credit against tax payable in Hong Kong by the Hong Kong resident person in respect of the profits.

As noted in DIPN No. 28, the reason for the change is as follows:

The reason for denying a deduction under section 16(1)(c) is that a DTA is intended to provide a comprehensive solution to all tax matters which are within its scope. The international practice is that where a DTA is in place, relief from double taxation should be allowed under the DTA only to the extent contemplated by it. The tax credit approach is adopted by Hong Kong in all existing DTAs. Section 16(2J) seeks to ensure that the DTAs will prevail in case of any conflicts between the provisions in the IRO and those in the DTAs. Therefore, if the foreign tax is paid in a DTA territory and the relevant DTA provides relief from double taxation by way of tax credit, a Hong Kong resident person can only apply for a tax credit under section 50. For a non-Hong Kong resident person who is not covered by the relevant DTA, it may seek unilateral relief from its residence of jurisdiction or bilateral relief under the DTA between its residence jurisdiction and the DTA territory (if any).

Powerful Tax Tools


FX Rates

Global FX Rates including Tax Year Average FX Rates and Spot Rates for all Reporting Currencies.


Corporate Tax Rates

Corporate tax rates, surtaxes, and effective tax rates for the current year, as well as historical rates and approved future rates.


Country Analysis

Detailed tax guidance for companies doing business in over 100 countries, including summaries and snapshots of key tax facts and issues.


Cross Border Tax Calculator

Calculate total tax costs and benefits of a cross border transaction including withholding tax, participation exemption and foreign tax credit rules.


Cross Border Tax Rates

Provides Domestic, treaty and EU cross border tax rates for over 5,000 country combinations for 9 different payment streams.



Complete overview of the OECD BEPS Project, including daily BEPS news, country adoption of BEPS measures, and an overview of the 15 BEPS Actions.


Tax Calendar

Customizable calendar tool that tracks corporate income tax, value added tax and transfer pricing obligations by country or entity.


Tax Forms

English translations of key tax forms for over 80 countries, including tax return forms, treaty benefit forms, withholding tax forms, and more.


Worldwide Tax Treaties

Repository including thousands of tax treaties (in English), OECD, UN and US Models, relevant EU Directives, Technical Explanations, and more.


Worldwide Tax Planner

Calculates the worldwide tax cost of what-if scenarios based on legal entity structure, taxable income, and cross border transactions.


Certified Rates Report

Customizable Certified Rates Report providing updated corporate and withholding tax rates at the end of each month for over 100 countries.


Withholding Tax Minimizer

Enables quick calculation of tax costs and benefits of cross border transactions considering all possible transaction combinations and optimal routes.


VAT Rates

Provides value added tax (VAT) rates, goods and services tax (GST) rates and other indirect tax rates for over 100 countries.


NOL Calculator

Country specific calculator to determine how net operating losses can be utilized in carryback and carryforward years.


Transfer Pricing Calculator

Calculates TP ratios under various TP methods and calculates the difference between target ratios and actual ratios.


Individual Income Tax Rates

Individual tax rates for over 100 countries.

Play of the Day

Translate Documents

English translations of key tax forms for over 80 countries, including tax return forms, treaty benefit forms, withholding tax forms, and more.

We’re here to help

We’re here to answer any questions you have about the Orbitax products and services.

Send us a message

Who’s behind Orbitax?

We’re committed to providing high value, low cost tax research and management solutions.

Learn More