Hong Kong Tax News Flash 

China withholding tax paid on passive income - Hong Kong profits tax considerations
  
Introduction
  
Under the China Corporate Income Tax ("CIT") Law, non-tax resident enterprises ("non-TREs") (i.e. companies incorporated in a foreign country and with its place of effective management located outside China) which have no permanent establishment in China are subject to China withholding tax ("WHT") on their passive income derived from China.  Passive income that is subject to WHT in China includes dividends, rentals, interest, royalties and gains from transfer of properties.
   
In January 2009, the State Administration of Taxation ("SAT") issued Guoshuifa [2009] 3 ("Circular 3") setting out the detailed requirements in relation to the enforcement of the collection of WHT on China-sourced passive income received by non-TREs.  For the key points of Circular 3 and its implications from the China tax perspective, please refer to our China Tax News Flash Issue 6, March 2009: "Tighter tax collection measures on passive income of foreign enterprises from China".
   
This News Flash examines the Hong Kong profits tax issues on passive income derived from China by Hong Kong incorporated companies having their effective management in Hong Kong and without a permanent establishment in China (i.e. a non-TRE for China tax purposes).
  
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Read more by downloading our Hong Kong Tax News Flash (Jun 2009, Issue 6) (pdf file, 128KB) for your reference.
   
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