Dec. 17 – Hong Kong and Vietnam have finalized a double taxation agreement that will decrease the amount of tax being paid by each country's investors.

The agreement will stipulate that double taxation will be avoided by way of any tax paid in Hong Kong by Vietnam residents or companies shall be allowed as a credit against any tax payables in respect of the same incomes in Vietnam.

Vietnam News reports that pact was signed in Hanoi yesterday by visiting Hong Kong financial secretary John Tsang, who is on a five-day visit to the country to enhance understanding of its economic and business climate.

"The agreement represents tax savings and a higher degree of certainty on taxation rights for investors from both Viet Nam and Hong Kong when they engage in bilateral trade and investment," Tsang told Vietnam News. "It also fosters economic co-operation and protects both governments’ revenue bases."

Last year, bilateral trade between the two was more than US$3 billion while for the first nine months of the year, trade increased by 25 percent.

Tsang added that more than 11 percent of trade worth US$1.7 billion, between Vietnam and mainland China passed through Hong Kong.

Hong Kong’s Dragonair is now operating daily flights from Hanoi to Hong Kong.