There was an announcement by the State Administration of Taxation (SAT) of China. And it was announced that the tax authority of Mainland China can determine tax resident status of a business or entities operating in Hong Kong.
In certain situations a tax residence certificate issued by the Hong Kong tax authority is required. This will be required in the following circumstances:
- when the Chinese tax authorities are suspicious of the applicant’s resident status;
- when documents submitted are not adequate to establish resident status of the applicant;
- where a legal business entity, registered outside Hong Kong, argues that its management is within the territory; and
- when an individual declaring residence in Hong Kong stays within the country only for a very short period of time.
Hong Kong may issue the respective tax residence certificate in some cases. However, this certificate may need to be authenticated by the Mainland China tax authority.
