The Arrangement for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income between the Mainland and the Hong Kong Special Administrative Region (including the Protocol thereto) ("the Arrangement") entered into force on 8 December 2006.

The Mainland and Hong Kong have different views on the interpretation of some of the Articles of the Arrangement. Agreement was reached on the necessary amendments and implementation rules upon negotiation on 11 September 2007. After the meeting, both Sides initialed the Second Protocol to the Arrangement and signed the exchange of letters [the letter from Hong Kong to the Mainland and the reply from the Mainland (in Chinese only)]. The latter became effective on the date of signature that was 11 September 2007 while the Second Protocol became effective on 11 June 2008.

The Second Protocol to 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 Second Protocol") was formally signed on 30 January 2008.

According to Article 6 of the Second Protocol, this Protocol shall, upon the written notifications by both Sides of the completion of their respective required approval procedures, enter into force on the date of the later of these notifications.

For the purpose of giving effect to the Second Protocol, an order was made by the Chief Executive in Council on 15 April 2008, under section 49 of the Inland Revenue Ordinance. The Order was published in the Gazette as Legal Notice 89 of 2008. On 26 May 2008, Hong Kong sent a notification of the completion of the ratification procedures to the Mainland and received a notification dated 11 June 2008 from the Mainland confirming the completion of its approval procedures. The Second Protocol has therefore become effective on 11 June 2008.

The 3rd round of negotiations for an agreement between Hong Kong and Vietnam for the avoidance of double taxation("Agreement") was held on 26 and 27 May 2008 in Hong Kong. The negotiation was conducted in a friendly, cooperative and constructive atmosphere of mutual understanding. Consensus was reached on all the provisions of the proposed Agreement, except that the Vietnamese Side has to seek the approval from its relevant authority on a certain technical issue. The proposed Agreement was initialed after the negotiation and both sides will endeavour to arrange for the formal signing of the proposed Agreement.

The Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income between Hong Kong and Thailand was formally signed on 7 September 2005. The Agreement entered into force on 7 December 2005.

After the Agreement became effective, the Hong Kong business sector has doubt whether the profits remitted to a Hong Kong head office by a branch office in Thailand is subject to tax in Thailand. On 21 February 2008, the Hong Kong Special Administrative Region Government replied to the Note from the Thai Government and confirmed the understanding that either Party shall not impose a tax on profits remitted by a permanent establishment of an enterprise of the Other Party.

The Note from the Thai Government and the captioned Note from the HKSAR Government shall form an integral part of the Agreement and shall enter into force on the date that the Agreement entered into force, that is, 7 December 2005.

Please click here for the Note from the Government of the Hong Kong Special Administrative Region to the Government of the Kingdom of Thailand dated 21 February 2008.