The income and capital tax treaty between Georgia and Hong Kong will enter into force on 1 July 2021. The treaty, signed by Georgia on 25 September 2020 and by Hong Kong on 5 October 2020, is the first of its kind between the two jurisdictions.
The treaty covers Georgian profit tax, income tax, and property tax, and covers Hong Kong profits tax, salaries tax, and property tax.
If a person, other than an individual, is considered resident in both Contracting Parties, the competent authorities will determine the person's residence for the purpose of the arrangement through mutual agreement, having regard to its place of effective management, the place where it is incorporated or otherwise constituted, and any other relevant factors. If no agreement is reached, such person shall not be entitled to any relief or exemption from tax provided by the arrangement, except to the extent and in such manner as may be agreed upon by the competent authorities of both Contracting Parties.
The following capital gains derived by a resident of one Contracting Party may be taxed by the other Party:
Gains from the alienation of other property by a resident of a Contracting Party may only be taxed by that Party.
Both jurisdictions apply the credit method for the elimination of double taxation.
Article 27 (Entitlement to Benefits) provides that a benefit under the treaty shall not be granted in respect of an item of income if it is reasonable to conclude, having regard to all relevant facts and circumstances, that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in that benefit, unless it is established that granting that benefit in these circumstances would be in accordance with the object and purpose of the relevant provisions of the treaty.
The treaty applies in Georgia from 1 January 2022 and applies in Hong Kong from 1 April 2022.