China and Hong Kong on April 1 signed the fourth protocol to their tax arrangement, clarifying the conditions under which an investment fund would be qualified for Hong Kong resident status, Hong Kong’s Inland Revenue Department announced.
The agreement also specifies the tax treatment of gains derived from the sale and purchase of shares in listed companies, lowers the Chinese withholding tax on royalties paid to aircraft and ship leasing businesses from seven percent to five percent, and expands the types of items covered under exchange of information.
Secretary for Financial Services and the Treasury, Professor K C Chan, said the provisions concerning when an investment fund is qualified for Hong Kong resident status “will be conducive to the actively promoted asset management businesses in Hong Kong, and will in turn help strengthen Hong Kong’s status as an international financial center.”
The protocol will come into force after the completion of ratification procedures and notification by both sides.
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