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These notes are issued for the information of taxpayers and their tax - page 48 / 68

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Article 15

DIRECTORS’ FEES

115.

Article 15 provides that directors’ fees and other similar payments

derived by a resident of One Side in his capacity as a member of the board of directors of a company which is a resident of the Other Side may be taxed in that Other Side. In other words, directors’ fees received by a resident of either Side in his capacity as a director of a company may be taxed in the Side of

which the company Side or the place

is a resident, irrespective where the services are

of the period of his stay in either

actually

rendered.

Therefore,

directors’ fees derived a Mainland company Mainland. Likewise,

by a Hong Kong resident in his capacity as a director of will all be subject to the individual income tax in the directors’ fees derived by a Mainland resident in his

capacity as a director tax in Hong Kong. benefits in kind (such

of a Hong Kong “Directors’ fees as share options,

company will all be subject to salaries and other similar payments” include the use of a residence or car, health or

life

insurance

coverage

and

club

memberships).

“Directors’

fees

and

other

similar

payments”

do

not

include

wages,

salaries

and

other

remunerations

paid

to

a

director

on

account

of

his

other

functions

with

the

company

(e.g.

as

an

employee or consultant).

Such wages, salaries and other remunerations will

be dealt with in accordance with Article 14 (in the case employment) and Article 7 (in the case of business profits).

of

income

from

Article 16

ARTISTES AND SPORTSPERSONS

116.

Paragraph 1 of Article 16 provides that income derived by a resident

of One Side as an entertainer, a musician or a sportsperson, from his personal activities as such exercised in the Other Side, may be taxed in that Other Side. A theatre artiste, a musician or a sportsperson who performs in the Other Side may derive substantial amounts of income, yet his stay may only be for a short period of time, usually not exceeding 183 days. Therefore, paragraph 1 of Article 16 provides that the relevant income may be taxed in the Side where his activities are exercised. In addition, paragraph 2 of Article 16 stipulates that income in respect of personal activities exercised by an artiste or a sportsperson may be taxed in the Side in which the activities are exercised, irrespective of whether the income accrues ultimately to the artiste or sportsperson himself or to another person (including a company or any other legal entity). This is to ensure that all income derived by an entertainer or a sportsperson in respect of

44

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