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These notes are issued for the information of taxpayers and their tax - page 50 / 68

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“recognized retirement scheme” in Hong Kong shall be taxable only in Hong Kong. In Hong Kong, a “recognized retirement scheme” means a “recognized occupational retirement scheme” and a “mandatory provident fund scheme”.

Article 18

GOVERNMENT SERVICE

120.

According to the principle of Article 18, remuneration and pensions

paid by the Government of One Side to an individual (other than an individual who is a resident of the Other Side and renders services in that Other Side) in respect of services rendered to that Government, in the discharge of

government functions shall be taxable only in that Side.

121.

There are three paragraphs in Article 18.

Paragraph 1 applies to

remuneration other than pensions. Sub-paragraph (1) states that salaries and wages paid by the Government of One Side or a local authority thereof to an individual in respect of services rendered to that Government or authority, in the discharge of government functions, shall be taxable only in that Side. Sub-paragraph (2) applies to cases which are exceptions to those covered by sub-paragraph (1). Sub-paragraph (2) stipulates that salaries and wages paid by the Government of One Side or a local authority thereof to an individual in respect of services rendered to that Government or authority, in the discharge of government functions shall be taxable only in the Other Side if the services are rendered in that Other Side and the individual is a resident of that Other Side who did not become a resident of that Other Side by reason only of the rendering of such services. The expression “a resident of that Other Side who did not become a resident of that Other Side by reason only of the rendering of such services” in sub-paragraph (2) refers to an individual who is originally a resident of that Other Side and does not become the resident of that Other Side

only because he is employed by the Government of authority thereof to render services in that Other Side.

One

Side

or

a

local

122.

For example, the income of a Hong Kong resident employed by the

Hong Kong Government to work in its office in Beijing shall be taxable only in Hong Kong. On the other hand, the income of a Mainland resident employed by the Hong Kong Government to work in the Beijing office shall be taxable only in the Mainland. The income of a Mainland resident employed by the Central People’s Government to work in the Hong Kong office shall be taxable

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