Vietnam and Hong Kong Tuesday signed a double taxation avoidance agreement that reduces the amount of tax to be paid by investors, the Ministry of Finance said.

The agreement would improve the legal environment for investors from both Vietnam and Hong Kong, Tuan said.

Hong Kong Financial Secretary John C Tsang said the agreement represented tax savings and a higher degree of certainty on taxation rights for investors and would elevate the relationship between Hong Kong and Vietnam to a new level.

Under the agreement, double taxation is avoided in that any tax paid in Hong Kong by Vietnam residents or companies shall be allowed as a credit against any tax payable in respect of the same incomes in Vietnam, a statement on the Hong Kong government website said.

Profits earned by Hong Kong residents from international shipping that is based in Vietnam, which are currently subject to tax here, will enjoy tax exemption under the agreement.

Hong Kong ranks fifth among the countries and territories that have invested in Vietnam, with more than 400 projects so far and a total registered investment of about US$5 billion. The bilateral trade value between Vietnam and Hong Kong hit $2 billion last year.

Source: Thanh Nien