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Seminar on Mainland's new tax policy in eliminating double taxation
(with photo)
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The Inland Revenue Department (IRD) hosted a tax seminar entitled
"The Mainland's recent tax policy and updates on Hong Kong's
tax treaty" today (June 11), offering some 600 participants
from the business and accounting sectors a better understanding
on how the Mainland's new tax policy helps the trade in eliminating
double taxation.
Speakers at the seminar included the State Administration
of Taxation (SAT) Chief Economist, Mr Zhang Zhiyong; the International
Taxation Department Director General, Ms Gong Zuying; International
Taxation Department Directors Mr Fu Shulin and Ms Fu Yao; the Commissioner
of Inland Revenue, Mr Chu Yam-yuen; and Deputy Commissioners of
Inland Revenue Mr Chiu Kwok-kit and Mr Wong Kuen-fai. The speakers
gave detailed presentations on the recent tax developments in the
Mainland and Hong Kong. The issues included the Mainland's change
of Business Tax to Value Added Tax, tax incentives for low-profit
small enterprises, and international tax policy; the recent development
of Hong Kong's tax treaty network; the Advance Pricing Arrangement
mechanism in Hong Kong; and the updates on the consultation for
mapping out the legal framework for Hong Kong to enter into Tax
Information Exchange Agreements.
In his opening remarks, Mr Chu said that the Mainland
and Hong Kong had signed the "Arrangement between the Mainland
of China and the Hong Kong Special Administrative Region for the
Avoidance of Double Taxation and the Prevention of Fiscal Evasion
with respect to Taxes on Income" (the Arrangement) in 2006,
with an aim of eliminating the incidence of double taxation encountered
by companies and individuals from both sides in their cross-border
activities resulting from the growing economic ties between the
two places. The Arrangement has laid down provisions to assign the
taxing rights between the two places, yet the Mainland and Hong
Kong have to handle the tax matters in accordance with their respective
domestic tax laws.
Since the implementation of the Arrangement, the
Mainland and Hong Kong have met and discussed regularly to perfect
the provisions of the Arrangement in a proactive and pragmatic manner,
with opinions of various parties taken into account, he added.
On the local business sector's concern about issues
arising from the implementation of the Arrangement by the two places,
among which is the double taxation faced by cross-border workers,
Mr Chu said that during the annual meeting between the SAT and the
IRD held in Beijing more than two years ago the two sides raised
the issue of double taxation for individual income tax in respect
of cross-boundary employment for the first time. Taking into consideration
the opinions of various parties and suggestions from the business
and accounting sectors, the two sides, in a proactive and pragmatic
approach, finally reached a consensus through rounds of discussion.
Both sides agreed to adopt the "number of physical presence
days" as the basis of allocation of taxable income. The new
rules are undoubtedly good news to Hong Kong people engaged in cross-boundary
employment.
The SAT released the Public Notice [2012] No.16
on April 26 this year introducing new rules with effect from June
1. The SAT adopts the basis of "number of physical presence
days" in calculating the salary and bonus accountable within
and out of the Mainland. This helps reduce the incidence of double
taxation of individual income tax in respect of cross-border employment
cases. Taking the opportunity, Mr Chu thanked the SAT for their
understanding and support.
Ends/Monday, June 11, 2012
Issued at HKT 19:08
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