“Made in China” is a phrase many are familiar with. With companies from China, Hong Kong (newly acquired by China) and other countries with businesses set up in India and vice versa, the issue of taxation gets tricky. The emergence of the Double Taxation Avoidance Agreement (DTAA) ensures foreign nationals and/or business houses conducting business and earning income in a foreign country, who often have to pay tax twice, once in source of income country and their respective home country, are no longer stuck with double taxation. To prevent this double taxation, DTAA creates a fair tax environment for individuals and businesses to carry out their business between the concerned countries.Recently, an agreeme
nt was signed between India and Hong Kong Special Administrative Region(HKSAR) of People’s Republic of China to avoid double taxation. The DTAA signed between the two countries will prevent tax evasion and increase investment opportunities and exchange of work force between India and HKSAR and vice versa. While, the effective date is not yet available, you can read the circular here.