Tax News Advisory Sep 2006

Jan 25, 2007

On 21 August 2006, the governments of mainland China and the Hong Kong Special Administrative Region signed the “Arrangement between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income” (“the 2006 Arrangement”).

The 2006 Arrangement replaces the current Double Taxation Arrangement which was signed by both parties in 1998. Upon its ratification, the new arrangement is expected to take effect from the year of assessment beginning 1 April 2007 for Hong Kong taxes and for mainland China taxes on or after 1 January 2007.

By extending the scope of the original agreement signed with the Mainland in 1998, added to its existing cultural, geographic and administrative qualities and clear tax incentives, Hong Kong has further enhanced its position as an ideal vehicle for investing into mainland China.

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