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These notes are issued for the information of taxpayers and their tax - page 44 / 68

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  • (2)

    the remuneration is paid by, or on behalf of, an employer who is not a resident of the Other Side;

  • (3)

    the remuneration is not borne by a permanent establishment which the employer has in the Other Side.

In addition, it is provided in paragraph 3 of Article 14 that remuneration derived in respect of an employment exercised aboard a ship, an aircraft or a land transport vehicle operated in shipping, air and land transport by an enterprise of One Side shall be taxable only in that Side.

“Present for not exceeding 183 days” exemption condition

110.

Under the provisions of paragraph 2(1) of Article 14, where an

employment is exercised by a resident of One Side in the Other Side, one of the conditions for tax exemption is satisfied only when he is present in the Other Side for a period or periods not exceeding in the aggregate 183 days in any 12-month period commencing or ending in the taxable period concerned. “Any 12-month period commencing or ending in the taxable period concerned” denotes two concepts, namely, that the number of days of presence may straddle over 2 years, i.e. the days of presence can be calculated continuously or in the aggregate irrespective of the year; and that a floating calculation method may be adopted. The 12-month period can commence or end at any day within the taxable period concerned. The taxable period in the Mainland is the calendar year, whereas the taxable period (i.e. the year of assessment) in

Hong Kong is the period from 1 April to 31 March of the next year.

111.

Take the year of assessment 2008/09 as an example, the time period

that should be taken into account, based on the two concepts mentioned above, is between 2 April 2007 and 30 March 2010. If a Mainland resident is not present in Hong Kong for more than 183 days in any 12-month period in the time period identified above, he has met the “present for not exceeding 183 days” exemption condition for the year of assessment 2008/09. However, if the Mainland resident is present in Hong Kong for more than 183 days in any 12-month period in the time period identified above, remuneration derived by him in respect of the employment exercised in Hong Kong is chargeable to

Hong Kong salaries tax for the year of assessment 2008/09.

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