Hong Kong Special Administrative Region (SAR) has moved a step forward in expanding its tax treaties network, with the signing of a double taxation treaty with Austria on Tuesday, the city's government said.

Hong Kong SAR and Austria signed the agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital.

The move enhanced Hong Kong's position as an international financial and business center and underlines HK's support for international efforts to promote tax transparency.

It was the 11th comprehensive agreement for the avoidance of double taxation (CDTA) concluded by Hong Kong with its trading partners, coming after those with Belgium, Thailand, China's Mainland, Luxembourg, Vietnam, Brunei, the Netherlands, Indonesia, Hungary and Kuwait.

HK's Secretary for Financial Services and the Treasury, K C Chan said the agreement clarified the taxing rights between the two jurisdictions, eliminated instances of double taxation on the same source of income, and lowered withholding tax rates on passive income from dividends and royalties.

"For businessmen and investors, the certainty and benefits arising from the agreement will encourage the two-way flow of talent and investment that will help reinforce the role of Hong Kong and Austria as business hubs and the premier locations for their operations," he said.

The CDTA will come into force after the completion of ratification procedures on both sides. In the case of Hong Kong, an order is required to be made by the Chief Executive in Council under the Inland Revenue Ordinance. The order is subject to negative vetting by the city's Legislative Council.