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These notes are issued for the information of taxpayers and their tax - page 14 / 68

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or controlled in Hong Kong”; one should consider the management or control of the bank instead of that of the branch in Hong Kong only. Hong Kong will continue to discuss with the Mainland on this point with a view to reaching a consensus.

28.

While the term “normally managed or controlled” has a broader

meaning than that of “central management and control”, in principle, a

company will only be a resident of business operations or control. Regard will be had to factors such

the place in which it actually exercises its The conclusion is wholly one of fact. as the nature of business operated by the

company, mode of operation, whether it has a permanent staff in Hong Kong, and whether Hong Kong is the place

office

or

employs

where

its

board of

directors meets to formulate policy.

29.

Where by reason of the definitions adopted by both Sides, a

company is a resident of both Sides, its resident status will be determined in accordance with paragraph 3 of Article 4, that is, the company shall be deemed to be a resident only of the Side in which its place of effective management is

situated.

30.

The term “place of effective management” refers to the place where

key management and strategic decisions that are necessary for the conduct of the company’s business are in substance made. Under normal circumstances, it is the place where the most senior persons of a company formulate the

direction and work plans of the company.

A company can have only one

place of effective management at any one time.

  • (III)

    Resident persons other than individuals and companies

    • 31.

      It is stated in paragraph 1(2)(iv) of Article 4 that any other person

constituted under the laws of Hong Kong, or if constituted outside Hong Kong, being normally managed or controlled in Hong Kong, will be considered to be a resident of Hong Kong. In Hong Kong, partnerships are the mode most likely to be encountered. In determining whether a trust, partnership or any other body of persons is normally managed or controlled in Hong Kong, the criteria are the same as those adopted in determining the resident status of a company.

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