Details of the income and capital tax treaty and protocol between Hong Kong and Liechtenstein, signed on 12 August 2010, have become available. The treaty was concluded in English language and generally follows the OECD Model Convention.
The maximum rates of withholding tax are:
|-||0% on dividends;|
|-||0% on interest; and|
|-||3% on royalties.|
Deviations from the OECD Model include that:
|-||A building site, a construction, assembly or installation project or supervisory activities in connection therewith, constitute a permanent establishment only if such site, project or activities last more than twelve months (Art. 5(3)(a)).|
|-||An enterprise furnishing services (including consultancy services) in other contracting party is deemed to have a PE if the services are provided for a period or periods exceeding 183 days in any 12-month period, and these services are performed directly or through employees or other personnel engaged by the enterprise for such purpose, in connection with a site, a project or supervisory activities (Art. 5(3)(b)).|
|-||Corresponding adjustment to be made by the other contracting state to the extent it is necessary to eliminate double taxation when a primary profit allocation adjustment based on the arm's length principle has been made by the contracting state in which the PE is situated.|
Hong Kong and Liechtenstein apply the credit method for the avoidance of double taxation.
Neither contracting party can terminate this treaty during a period of 5 years starting from the date of it entry into force (Art. 29)
The protocol specifies a list of information to be provided by the competent authority when making a request for information under the treaty.
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