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Türkiye has formally ratified a double taxation avoidance agreement with Hong Kong, marking the country's latest effort to strengthen economic ties and facilitate cross-border investment in the Asia-Pacific region.
The agreement, signed in Hong Kong on September 24, 2024, was published in Türkiye's Official Gazette as law, completing the domestic approval process. The treaty between the Government of the Republic of Türkiye and the Government of the Hong Kong Special Administrative Region of the People's Republic of China aims to prevent double taxation on income and combat tax evasion and tax avoidance.
Under the agreement, taxpayers operating in both jurisdictions can claim relief from double taxation by crediting taxes paid in one territory against tax liabilities in the other, subject to local laws and conditions. The framework clarifies taxing rights for cross-border activities and establishes mechanisms for resolving disputes between tax authorities.
The treaty is anticipated to enhance tax cooperation and strengthen economic relationships between Türkiye and Hong Kong, particularly within the context of the Belt and Road Initiative. The Chinese infrastructure and trade program has promoted connectivity projects across Eurasia, creating new opportunities for international business partnerships.
Double taxation agreements serve as critical tools for facilitating international commerce by ensuring businesses and individuals are not taxed twice on the same income. These treaties typically define permanent establishment rules, allocate taxing rights between countries, and provide dispute resolution procedures through mutual agreement protocols.
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Türkiye has now established double taxation avoidance agreements with more than 80 countries worldwide. The network includes major economic partners such as Germany, China, and the United States, each tailored to the specific economic and legal context of the bilateral relationship.
Each agreement is tailored for different means of the said countries. The agreement with Germany, updated in 2012, addresses the needs of a significant Turkish diaspora and substantial trade flows between the two nations. Meanwhile, the treaty with China provides clarity for Chinese companies investing in Türkiye and Turkish businesses operating in China, helping to reduce compliance costs and tax uncertainties.
These agreements form part of Türkiye's broader strategy to attract foreign investment and promote international trade through fair and transparent taxation frameworks. Each treaty includes provisions for information exchange between tax authorities to prevent evasion and ensure transparency in cross-border transactions.
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