China relaxes rules on Hong Kong tax resident status

HONG KONG – China has simplified procedures to substantiate Hong Kong tax resident status under the China-Hong Kong Double Taxation Agreement.  Lawyers Baker & McKenzie say a Hong Kong tax resident certificate issued by the Hong Kong Inland Revenue Department is generally, with certain exceptions, no longer required for treaty benefit application in China. 

The law firm says a certificate of incorporation, or a certificate of business registration, is now generally sufficient for Hong Kong enterprises to prove Hong Kong tax residency.

China has also signed a new double tax treaty with Switzerland to replace an existing treaty signed in 1990. While no introductory date has yet been announced, B&M say the new Treaty will halve the tax rate on dividends from 10% to 5%. However, capital gains are no longer exempt from a 10% withholding tax if the Swiss recipient of the gains holds, directly or indirectly, more than 25% of the Chinese company. www.bakeramckenzie.com (ATI).