Hong Kong and China Updates- Double Tax Arrangement (DTA)

Hong Kong and the PRC signed the Fourth Protocol to the double tax arrangement (DTA) between themselves on 1 April 2015. The most important amendment (a benefit to Hong Kong taxpayers) is to provide tax exemption in China for gains derived by Hong Kong tax residents and Hong Kong resident investment funds arising from disposal of shares listed in the Chinese stock exchanges, subject to conditions.

Two amendments which might not benefit Hong Kong tax payers are the introduction of a ”main purpose” test to the dividends, interest, royalties and capital gains articles as an additional anti-treaty abuse measure, and expanding the scope of information exchange under the DTA to cover information requests related to taxes other than income taxes.

The Fourth Protocol will likely enter into force within this year, after completion of the ratification procedures.

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Primasia will post the updates of Hong Kong and China from time to time. Follow us on our Website/ Blogger/ LinkedIn and stay tunned for our updates!

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