Hong Kong and China signed the Fourth Protocol to the Arrangement for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income on April 1, 2015.
According to the provision in the Fourth Protocol, the gains derived by a Hong Kong resident from the sales and purchase of shares in a Mainland listed company shall be taxable only in Hong Kong. The Fourth Protocol also amends the tax liability of aircraft and ship leasing business receiving royalties. The Mainland withholding tax on royalties paid to aircraft and ship leasing business, currently at seven per cent, will be capped at five per cent.
The Fourth Protocol will come into force after the completion of ratification procedures and notification by both sides.
