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HMRC internal manual

Double Taxation Relief Manual

Double Taxation Relief Manual: Guidance by country: Hong Kong: Interest

Most United Kingdom residents can claim relief from Hong Kong taxation on interest they receive.

The treaty provides for exemption from source state taxation where the beneficial owner of the interest is an individual, a company whose shares are regularly traded on a stock exchange or a bank which is not connected to the payer of the interest.

A close company can claim exemption from tax if it can show that its establishment, acquisition or maintenance was not to secure such treaty benefits.

Exemption is due if the payer of the interest is a bank or if the interest arises on a quoted Eurobond.

Exemption from source state taxation will also apply if the interest is paid by or to the Hong Kong Special Administrative Regime (including the Hong Kong Monetary Authority), the United Kingdom itself and any of its political subdivisions or local authorities.

The exemptions provided by the treaty are not given if the interest is effectively connected (see INTM153110 fifth sub-paragraph) with a permanent establishment which the United Kingdom resident recipient has in Hong Kong.