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UK Hong Kong DTA In Force

Robert Lee,, London

29 December 2010

The UK/Hong Kong Double Taxation Agreement that was signed on June 21, 2010 entered into force on December 20.

The agreement is effective in the United Kingdom from April 1, 2011 for corporation tax, and from April 6, 2011 for income tax and capital gains tax. It is effective in Hong Kong from April 1, 2011.

The Order brings into effect arrangements between the Governments of the United Kingdom and the Hong Kong Special Administrative Region of the People’s Republic of China for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and on Capital Gains.

The aim of the arrangement is to eliminate the double taxation of income or gains arising in one country and paid to residents of another country. This is done by allocating the taxing rights that each treaty partner has under its domestic law over the same income and gains and/or by providing relief from double taxation. The agreement provides additional protection for taxpayers by specific measures combating discrimination in tax treatment. More generally, such arrangements benefit the taxpayer by ensuring certainty of treatment and, as far as possible, by reducing compliance burdens.

The agreement also serves an Exchequer protection role by including provisions to combat tax avoidance and evasion – partly by measures providing for the exchange of information between revenue authorities. All of the UK’s recent double taxation agreements largely follow the approach adopted in the Organization for Economic Cooperation and Development’s (OECD) Model Tax Convention on Income and on Capital. The Arrangements scheduled to the Order continue that approach.

TAGS: capital gains tax (CGT) | compliance | tax | investment | double tax agreement (DTA) | tax avoidance | law | corporation tax | China | United Kingdom | agreements | Hong Kong | trade | individual income tax

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