Residents of Hong Kong, receiving royalties from sources in Indonesia, imposed in Indonesia's tax revenue as a royalty rate of 20%. The agreement will allow companies in this case, reduce the tax rate to level of 5%. The rate of the Indonesian income tax on interest paid to residents of Hong Kong, will also be reduced from 20% to 10%. Moreover, the parties reached agreement on the issue of enabling Hong Kong airlines that operate flights to Indonesia, be taxed at the rate of Hong Kong's corporate tax, which is below the rate applicable in Indonesia. In respect of the profits from international shipping, received residents of Hong Kong and the emerging in Indonesia, which is currently subject to tax there – The Agreement provides for reducing the tax rate to 50%. It should be noted that these agreements will come into force after ratification by the parties. Comments on the situation specialists Concept consulting Ltd.: 'At present, Hong Kong attracts international business, one of the lowest tax rates on corporate profits in Southeast Asia, as well as benefits provided by the territorial principle of taxation. This means that under the laws of Hong Kong, the income of companies that operate outside the territory of Hong Kong are not taxed on profit companies.
The decision to release the company from taxes take the Hong Kong tax authorities on the basis of the audit report. In addition, in Hong Kong there is no capital gains tax, no tax on dividends and interest. In addition to the tax treaties concluded with the Netherlands and Indonesia, Hong Kong has other tax treaties: China – in respect of income received by corporations and individuals, and some agreements with other countries including the usa (related to issues of navigation and aviation). In general, Hong Kong concluded a comprehensive agreement governing the taxation issues, from 8 countries, which is aimed at providing additional economic incentives to foreign companies and attract investment into the economy of Hong Kong '.