The Republic of Cyprus on Friday signed an agreement with the government of the Hong Kong Special Administrative Region of the People’s Republic of China aimed at eliminating double taxation on income and combating tax evasion and tax avoidance.

“The agreement creates a modern and reliable framework for tax cooperation that is expected to facilitate business activity and strengthen investment flows as well as trade transactions,” the finance ministry said in a statement.

“It will also contribute to reducing the overall burden by encouraging sustainable investments, without creating opportunities for tax evasion or tax avoidance, while ensuring legal certainty,” the ministry added.

According to the announcement, the bilateral agreement provides for a clear tax treatment of transactions between the two jurisdictions, offering certainty and stability for investors.

The convention also provides for the exchange of tax information between the competent authorities and establishes procedures for the settlement of tax disputes.

“The signing of this agreement reflects the importance attached by the government to the development of strong economic and political ties with international financial and commercial centres, particularly with partners such as Hong Kong, strengthening the prospects for cooperation in an ever-evolving global economic environment,” the ministry said.

The ministry said that the agreement was signed on behalf of the Republic of Cyprus by Ambassador to the People’s Republic of China Koula Sophianou.

She was accompanied by Cyprus’ Honorary Consul in Hong Kong Harindarpal Singh Banga.

On behalf of the Hong Kong Special Administrative Region of the People’s Republic of China, the agreement was signed by Financial Services and the Treasury Secretary Christopher Hui.