New tax deal between Hong Kong, mainland

Hong Kong-based firms and individuals will pay a reduced rate of tax on investment income earned from companies in mainland China, according to an agreement signed Monday by Hong Kong and Beijing officials. The agreement, which covers dividends, interest, royalties and capital gains, amongst other things, is designed to make Hong Kong more attractive as an offshore base for investments in the mainland, the Wall Street Journal reported. It is the extension of an existing system that avoids double taxation on profits and wages. Following formal ratification by both sides, the agreement will take effect in Hong Kong from the fiscal year beginning April and in China from the fiscal year beginning January 1.