Canada Hong Kong Double Taxation Agreement

6. Where a person who no longer has a residence in one of the contracting parties and immediately resides after the other contracting party is treated, for the purposes of taxation, in the first contracting party, as if he had disposed of a property (in this paragraph called “alienation”) and who is taxed in that part on the merits, the person may choose to be treated in the other contracting party for the purpose of the , just prior to being established in that other part, the person had sold and repurchased the property for an amount equal to the lesser value of its fair value on the date of disposal and the amount that the individual chose at the time of actual disposal as the proceeds of the assignment of the first part in connection with the assignment considered to be alienating. However, this provision does not apply to properties that arise immediately before the population of that other contracting party and may be taxed in that other contracting party, or to real estate located in a third party. Comparing the treaty with other tax treaties recently signed by Canada and Canada`s old tax treaties, we can see a change in Canada`s section 23 policy. Section 23, paragraph 2, was added to a “inconsistent clause.” The effect of this clause is to exempt the relevant competent authorities from national statutes of limitations, which may provide for delays in the resolution of tax disputes. Therefore, the inclusion of the “indeterminate clause” in the contract should benefit residents of Hong Kong and Canada, since “non-treaty tax cases,” including legal and economic double taxation cases submitted to the relevant authorities within three years, should be resolved, regardless of national barriers to prescribing in the Canadian or Hong Kong tax system. Until recently, this “inconsistent clause” in the map section of Canada`s treaty network has historically been included only in the Canada-U.S. tax treaty. (d) if the person has the right to stay in the Hong Kong Special Administrative Region and is also a Canadian national, or if the person does not have the right to reside in the Hong Kong Special Administrative Region and is not a Canadian national, the competent authorities of the contracting parties resolve the matter by mutual agreement.

4. The competent authorities of the parties endeavour to resolve by mutual agreement any difficulty or doubt about the interpretation or application of this agreement. 5. Businesses of a party whose capital is held, directly or indirectly, by one or more residents of the other party or whose capital is controlled in whole or in part, are not subject, in the first part of the contracting party, to a higher taxation or related requirement than the taxation and related requirements to which other similar companies are subject. , residents of the first contracting party are subject. whose capital is or may be held or controlled, directly or indirectly, by one or more residents of a third party, who is totally or partially owned or controlled. The use of the term “resident of a party” as opposed to “Resident of a Contracting State” should not affect the application of Canadian rules to foreign subsidiaries. For example, Canadian foreign subsidiary rules provide that income from the active operations of a foreign subsidiary of a Canadian company classified as a tax-exempt surplus may be distributed to the Canadian entity in the form of a Canadian tax-free dividend if the foreign subsidiary is established in a country with which Canada has a tax agreement or tax information exchange agreement (TIEA).

Regulation 5907 (11) of the Canada Income Tax Act (the “Tax Act”) is drafted in such a way that a designated contracting country with which Canada has a comprehensive agreement or agreement to abolish double taxation includes “a sovereign state or other jurisdiction.” Therefore, the fact that Hong Kong is not a sovereign state as such should be to reduce, tax-free, dividends from tax-exempt surpluses.

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