On 24 August 2017, officials from Hong Kong and Saudi Arabia signed an income tax treaty. The treaty is the first of its kind between the two jurisdictions.
The treaty covers Hong Kong profits tax, salaries tax, and property tax. It covers Saudi Zakat and income tax, including the natural gas investment tax.
The treaty includes the provision that a permanent establishment will be deemed constituted when an enterprise furnishes services within a Contracting Party through employees or other engaged personnel for the same or connected project for a period or periods aggregating more than 183 days within any 12-month period.
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 countries apply the credit method for the elimination of double taxation.
The treaty does not include a non-discrimination article, although the final protocol provides that if Saudi Arabia enters into a tax treaty that does include an article on non-discrimination (with certain exceptions), then negotiations will be entered into to introduce provisions on non-discrimination into the Hong Kong-Saudi Arabia treaty.
The treaty will enter into force on the first day of the second month following the exchange of the ratification instruments, and will apply in Hong Kong from 1 April of the year following its entry into force and in Saudi Arabia from 1 January of the year following its entry into force.
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