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These notes are issued for the information of taxpayers and their tax - page 49 / 68

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his personal activities may be taxed in the Side in which the activities are exercised.

Article 17

PENSIONS

117.

Regarding pensions and other similar remuneration paid to a resident

of One Side in consideration of past employment, Article 17 stipulates a taxation principle that is different from that on which income from employment is taxed. The term “pensions and other similar remuneration” includes annuities paid in respect of past employment, lump sum payments in lieu of pensions received at the time of or after leaving services, sums received by way of commutation of pensions and pensions received by widows and orphans. However, Article 17 does not apply to a lump sum payment made upon cessation of an employment or termination of a contract. Such a payment falls within the meaning of income from employment and therefore will be

taxed in accordance with the provisions of Article 14.

118.

According to the provisions of paragraph 1 of Article 17, pensions

received by an individual shall be taxable only in the Side of which the individual is a resident, except that government pensions will be taxed in accordance with paragraph 2 of Article 18. Paragraph 2 of Article 17 also stipulates that notwithstanding the provisions of paragraph 1, pensions and other payments made under the following pension schemes shall be taxable

only in the Side in which the schemes are implemented:

  • (1)

    a public scheme which is part of the social security system implemented by the Government of One Side or a local authority thereof;

  • (2)

    an arrangement in which individuals may participate to secure retirement benefits and which is recognized for tax purposes in One Side.

119.

According to the provisions of paragraph 2 of Article 17, pensions

and other similar payments made under a public scheme which is part of the social security system implemented in the Mainland shall be taxable only in the Mainland; whilst pensions and other similar payments made under a

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