What Changed
- Hong Kong SAR and Laos signed a bilateral Comprehensive Avoidance of Double Taxation Agreement (CDTA) on October 29, 2026.
- Withholding tax rates in Laos for Hong Kong residents will be lowered to 5 per cent for interest and a minimum of 5 per cent for dividends.
- The CDTA requires completion of domestic ratification procedures in both jurisdictions before coming into force.
Cross-border investors, business entities, and residents operating between Hong Kong SAR and Laos face updated tax rules following the signing of a Comprehensive Avoidance of Double Taxation Agreement (CDTA). On October 29, 2026, representatives from the Hong Kong Special Administrative Region (HKSAR) Government and the Government of Laos signed the agreement in Hong Kong, marking Hong Kong's 61st CDTA.
**Key Provisions and Tax Adjustments**
Under the newly signed CDTA, taxing rights are formally allocated between Hong Kong SAR and Laos to eliminate double taxation on cross-border economic activities:
- **Tax Credits:** Tax paid by Hong Kong residents in Laos on income will be allowed as a credit against tax payable in Hong Kong for the same income, subject to the provisions of the Inland Revenue Ordinance (Cap. 112) (IRO).
- **Withholding Tax Reductions:** Laos' withholding tax rate for Hong Kong residents on dividends, currently set at 10 per cent, will be reduced to a minimum of 5 per cent.
- **Interest Tax Rates:** Laos' withholding tax rate on interest for Hong Kong residents, currently at 10 per cent, will also be reduced to 5 per cent.
**Strategic Context**
This agreement represents the sixth CDTA signed by Hong Kong in 2026 and the 16th signed under the current-term HKSAR Government. It expands Hong Kong's CDTA network to seven member states of the Association of Southeast Asian Nations (ASEAN), covering more than 70 per cent of ASEAN's total population and gross domestic product. The CDTA aims to facilitate cross-border investment, leverage Hong Kong's role linking Mainland China with international markets, and support regional economic integration along the Belt and Road Initiative.
**Implementation and Entry into Force**
The agreement has been signed but is not yet in force. It will take effect after both Hong Kong SAR and Laos complete their respective domestic ratification procedures. In Hong Kong SAR, the Chief Executive in Council will issue an order under the IRO, which will be submitted to the Legislative Council for negative vetting. Detailed provisions of the agreement are published on the Inland Revenue Department's website.
Who May Be Affected
Cross-border investors, commercial entities, and taxpayers in Hong Kong SAR and Laos.
Cross-Border Context
Strengthens tax ties between Hong Kong SAR and Laos, expanding Hong Kong's CDTA coverage across ASEAN member states and facilitating capital flows linked to Mainland China and the Belt and Road Initiative.
What to check next
- Monitor the publication of the Chief Executive in Council order under the Inland Revenue Ordinance (Cap. 112) in the Hong Kong Gazette.
- Review the full text of the CDTA on the website of the Hong Kong Inland Revenue Department once posted.
This article provides general information and does not constitute legal advice. Consult the official text and obtain advice appropriate to your circumstances where needed.