New China – Hong Kong tax arrangement protocol to boost Hong Kong leasing and asset management industries

New China – Hong Kong tax arrangement protocol to...

China Tax Alert - Issue 5, April 2015  

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On 1 April 2015 the governments of the People’s Republic of China (PRC) and the Hong Kong SAR signed the Fourth Protocol (the Protocol) to the China - Hong Kong Double Tax Arrangement (DTA) of 2008. The Protocol provides ‘best in class’ tax treaty treatments for Hong Kong enterprises undertaking aircraft and ship leasing from the Mainland and those conducting cross border public market securities investment activities. These tax treatments are superior to those conferred by China to other jurisdictions to date and would boost Hong Kong’s development as a capital equipment leasing hub and asset management centre. The Protocol also introduces new DTA anti-avoidance provisions and an updated exchange of information article which is in line with the PRC’s more rigorous international tax enforcement initiative in the context of the G20/OECD Base Erosion and Profit Shifting (BEPS) Action Plan.  

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