A double taxation avoidance agreement between India and Hong Kong has come into effect from Friday, which officials say would stimulate more the two-way flow of investments and help curb fiscal evasion with respect to taxes on income.
The agreement between India and the Hong Kong Special Administrative Region (HKSAR) of People's Republic of China for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to taxes on income has become operational, the Indian Consulate in Hong Kong said in a press release.
The agreement was signed on March 19, 2018. Both sides have completed required formalities for the agreement to come into effect, it said.
"Accordingly the agreement has entered into force on November 30, 2018," the release said.
"The Double Taxation Avoidance Agreement will stimulate flow of investment, technology and personnel from India to HKSAR and vice versa, prevent double taxation and provide for exchange of information between us. It will improve transparency in tax matters and will help curb tax evasion and tax avoidance," it said.
Indian Ambassador to China Gautam Bambawale, who is retiring from service, told PTI here that the Indian community in Hong Kong has welcomed such a treaty as it would facilitate easy two-way investment process.
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Also on November 26, India and China have amended the bilateral tax treaty which will help prevent tax evasion by allowing exchange of information.
The Indian Finance Ministry said both the countries have signed a protocol on November 26, 2018, to amend the Double Taxation Avoidance Agreement (DTAA) for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income.
"The Protocol updates the existing provisions for exchange of information to the latest international standards," the ministry said in a statement.