China revamps the resident certificate procedure for tax arrangement with Hong Kong (Bristol, UK) - China’s State Administration of Taxation (SAT) department recently announced that the Mainland China tax authority may determine tax resident status of a business or entities operating in Hong Kong. The tax resident status will be based on the Certificate of Incorporation of the business entity issued by Registrar of Companies of Hong Kong (or the Business Registration Certificate) when the business which is a legal entity applies to obtain for the treaty benefit. The procedures will take effect from November 1, 2013. When a tax residence certificate is required: There exist certain situations in which a tax residence certificate issued by the Hong Kong tax authority is required. These cases may include:
when 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 country when an individual declaring residence in Hong Kong stays within the country only for a very short period of time
Required documents: In order to obtain a Hong Kong tax residence certificate, the below mentioned documents are required submissions to the Hong Kong tax authority:
a letter requesting residence issued to the Hong Kong tax authority from the Mainland tax authority (at the province level or higher) Completed relevant application form for resident status issued by the Hong Kong tax authority. There are two versions available one for the companies incorporated in Hong Kong another for companies not incorporated in Hong Kong
In some cases Hong Kong may issue the respective tax residence certificate. However, the Mainland China tax authority may need to authenticate this certificate. Hong Kong incorporated companies may find the new application process more simplified than previously. Conversely, non-Hong Kong incorporated companies may find the process more difficult to establish tax resident status. For more information about doing business overseas or to know more about our International Expansion Services team please contact us. Subscribe to regular global tax compliance alerts from Nair & Co.
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