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These notes are issued for the information of taxpayers and their tax - page 23 / 68

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establishment in the Other Side if its activities in that Other Side are conducted through an independent agent who is acting in the ordinary course of its business. However, when the activities of such an agent are wholly or almost wholly performed on behalf of that enterprise, he would not be regarded as an independent agent. The scope of his duties and responsibilities and whether he has the right to conclude contracts on behalf of the enterprise would determine whether or not that enterprise has a permanent establishment in that Other Side.

Article 6

INCOME FROM IMMOVABLE PROPERTY

48.

“Income from immovable property” means the income derived from

the use of immovable property without transfer of ownership. Income derived from alienation of immovable property will be dealt with in accordance with

the provisions of Article 13 (Capital Gains).

49.

It is specifically provided in paragraph 1 of Article 6 that income

derived by a resident of One Side from immovable property (including income from agriculture or forestry) situated in the Other Side may be taxed in that

Other Side.

50.

According to the elaboration in paragraph 3 of Article 6, income

derived from immovable property may be income derived from the direct use of immovable property by the owner, such as running a farm or carrying on animal husbandry, or income derived from letting or use in any other form of

immovable property.

51.

To avoid possible disputes over differences in interpretation, the term

“immovable property” is given the meaning which it has under the laws of the Side in which the property in question is situated. In Hong Kong, under the Interpretation and General Clauses Ordinance (Cap. 1), “immovable property”

means:

  • (1)

    land, whether covered by water or not;

  • (2)

    any estate, right, interest or easement in or over any land; and

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