Hong Kong and Jordan have taken a significant step in international economic cooperation by signing a comprehensive avoidance of double taxation agreement (CDTA) on September 4, 2025. This landmark treaty, the 53rd such agreement for Hong Kong, promises to simplify cross-border financial interactions and reduce tax burdens for businesses and individuals operating between the two jurisdictions.

The agreement was signed during a bilateral meeting in Beijing, with Hong Kong’s Secretary for Financial Services & the Treasury, Christopher Hui, and Jordan’s Ambassador to China, Hussam Al Husseini, representing their respective regions. At its core, the CDTA addresses a critical challenge for international businesses: the potential of being taxed twice on the same income.

Under the new agreement, Hong Kong residents will now enjoy robust protection against double taxation. Any taxes paid in Jordan can be credited against tax obligations in Hong Kong, in accordance with Hong Kong’s Inland Revenue Ordinance. This mechanism ensures that individuals and businesses aren’t financially penalized for engaging in international trade or investment.

One of the most attractive features of the agreement is the reduction of withholding tax rates. Jordan will now cap its withholding tax rates for Hong Kong residents at 5% on dividends, interest, and royalties—a notable decrease from the previous 10% maximum rate. This lower tax rate is strategically designed to make cross-border investments more appealing and cost-effective.

The CDTA goes beyond simple tax reduction, providing clarity on the allocation of taxing rights between Hong Kong and Jordan. This transparency helps investors and businesses better understand and assess their potential tax liabilities when conducting economic activities across borders. By reducing financial risks and administrative complexities, the agreement creates a more predictable environment for international commerce.

Christopher Hui emphasized that this agreement is part of Hong Kong’s broader strategy to expand its network of tax treaties, particularly within the Belt & Road Initiative. The CDTA reflects the Hong Kong Special Administrative Region’s commitment to enhancing economic collaboration and reinforcing its position as a leading international business hub.

While the agreement isn’t specifically focused on insurance products, it has significant implications for the financial services sector. Insurance companies and professionals operating in both Hong Kong and Jordan will benefit from a clearer tax framework, potentially reducing operational costs and facilitating cross-border business. Residents with insurance policies or investments in Jordan can now take advantage of reduced withholding tax rates on related income.

The implementation of the agreement requires completion of ratification processes by both sides. In Hong Kong, this involves the Chief Executive in Council issuing an order under the Inland Revenue Ordinance, which will then be subject to negative vetting by the Legislative Council. Until the official enactment, existing tax arrangements between the two jurisdictions will remain in place.

This development is more than just a bilateral tax agreement—it represents a strategic move to create a more interconnected and financially efficient global business environment. By continuing to establish such tax treaties, Hong Kong is demonstrating its commitment to supporting international trade and investment.

As businesses and individuals navigate increasingly complex global economic landscapes, agreements like the Hong Kong-Jordan CDTA provide a beacon of simplification and opportunity. The treaty offers tangible benefits: avoiding double taxation, reducing tax rates, and providing clear guidelines for cross-border financial activities.