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These notes are issued for the information of taxpayers and their tax - page 45 / 68

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112.

In the year when Article 14 of the Comprehensive Arrangement

became effective (the year 2007 for the Mainland and the year of assessment 2007/08 for Hong Kong), the Mainland adopts 1 January 2007 as the commencement date for the purposes of ascertaining the number of days a Hong Kong resident is present in the Mainland; whilst Hong Kong adopts 1 April 2007 as the commencement date for the purposes of ascertaining the number of days a Mainland resident is present in Hong Kong. In other words, in the first year of Article 14’s application, the Mainland regards any 12-month period to be any 12-month period commencing in the period from 1 January 2007 to 31 December 2007; and Hong Kong regards any 12-month period to be any 12-month period commencing in the period from 1 April 2007 to 31 March

2008.

113.

The “days of physical presence” method is adopted in deciding

whether a resident is present in the Other Side for a period or periods exceeding 183 days. Under this method, the day of arrival or departure and each day in the period during which he stays in the Other Side, however brief and for

whatever reasons, will be counted as one day respectively.

Hong Kong residents working across the Mainland border

114.

If a resident of Hong Kong provides services both in the Mainland

and in Hong Kong, the tax treatment in both Sides is as follows:

  • (1)

    Tax liabilities in Hong Kong

    • -

      the income derived from his Hong Kong employment will be wholly assessable irrespective of whether it has been paid by the Hong Kong employer or a Mainland establishment. However, if the Hong Kong resident has paid individual income tax in respect of the income attributable to services rendered by him in the Mainland, he may apply for tax exemption for that part of the income under section 8(1A)(c) of the Ordinance, or for a tax credit under the provisions of Article 21 of the Comprehensive Arrangement. Application may be made on his tax return for the year of assessment concerned, and supported with evidence of the Mainland tax payment. In general, tax

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