Dual Taxation & Investment Protection Agreements Between Hong Kong & Bahrain



On March 3, 2024, Hong Kong and Bahrain signed a CDTA and IPPA to improve economic and commercial ties.

In addition, the CDTA applies to individuals and companies in one or both of the contracting parties who want to eliminate double taxation on income without allowing tax evasion or avoidance. It allocates taxation rights between the two jurisdictions and helps investors calculate cross-border economic activity tax responsibilities.

Hong Kong companies can enjoy double taxation relief under the Hong Kong-Bahrain CDTA by crediting any tax paid in Bahrain, either directly or by deduction, against the tax payable in Hong Kong on the same income, subject to Hong Kong tax laws. In Hong Kong SAR, the agreement applies to profits, salaries, and property taxes.

After both jurisdictions ratify, this CDTA will take effect. Hong Kong will implement it through a Chief Executive in Council order under the Inland Revenue Ordinance (Cap. 112). The Legislative Council checks the order negatively.


Furthermore, CDTA is Hong Kong’s 49th agreement. Hong Kong will continue to negotiate with trading and investment partners to expand its CDTA network to boost its appeal as a business and investment hub and consolidate its status as an international economic and trade center, according to Secretary for Financial Services and the Treasury Christopher Hui.

Along with the CDTA, the two countries joined the IPPA to strengthen mutual investment protection and boost investor confidence and investment flows.

The agreement requires the two governments to treat investors of the opposite side fairly, equitably, and non-discriminatorily, compensate them for expropriation, and allow free transfers of investments and returns. It also offers international investment dispute resolution. The agreement will take effect after both sides complete their internal procedures.

This term’s second IPPA is the Hong Kong-Bahrain one, following the IPPA with Türkiye in October. This is Hong Kong’s 24th foreign investment agreement.

After the Hong Kong-Bahrain IPPA was signed, the Dedicated Fund on Branding, Upgrading, and Domestic Sales (“the BUD Fund”) was expanded to cover Bahrain (the 39th eligible economy) immediately to help Hong Kong businesses grow there.

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