Hong Kong, United Kingdom Enter Into Double Taxation Shipping Agreement

by Amanda Banks, Tax-news.com, London

12 June 2001

The UK Inland Revenue has released details of an agreement for the avoidance of double taxation entered into with the Hong Kong Special Administrative Region covering all revenues which arise from the business of international shipping transport.

In a statement released by the Inland Revenue, the department explains that the aim of a Double Taxation Agreement is to eliminate the double taxation of income arising in one state and paid to residents of another state. Without an Agreement the income paid could be taxable both in the State where it arises and in the territory of residence of the recipient. In addition the tax treaty stipulates that one or other of the territories gives up all or part of their taxing rights on various classes of income.

This particular Agreement is limited to revenues from international shipping transport and provides that profits derived from such business by an enterprise of the United Kingdom or the Hong Kong Special Administrative Region are exempt from tax in the area of the other Contracting Party.

The Inland Reveue also states that the exemption also applies to profits derived from participation in a pool, joint business or international operating agency, to gains derived from the alienation of ships or moveable property, and to capital represented by such ships and moveable property.

Signed in Hong Kong on 25 October, 2000, and entering into force on 3 May, 2001, the provisions of the Agreement will apply in the UK from 1 April 2002 for Corporation Tax and from 6 April 2002 for income tax and capital gains tax. It will apply in the Hong Kong Special Administrative Region, from 1 April 2002.

The Schedule to the Double Taxation Relief(Shipping Transport) (Hong Kong) Order 2000 (Statutory Instrument 2000 No.3248), can be found in the Tax-news.com Resources Section or at the UK government web site at: http://www.hmso.gov.uk.

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