How are tax residents recognized after obtaining Hong Kong status?

With the development of the Mainland's economy and the gradual increase in foreign trade, more and more businessmen choose to register Hong Kong companies for their business in order to enjoy the benefits ofConvenient foreign exchange services in Hong Kongcap (a poem)Tax incentives.

However, with the gradual deepening of the CRS agreement, the Mainland's tax recovery on overseas assets has become more stringent. Not only does Hong KongLower tax ratesThe Government has also entered into a number of agreements with the Mainland.Double taxation agreementThe tax burden is reduced by giving businesses the opportunity to choose a lower tax rate area to pay their taxes.

In order to avoid double taxation (where an item of income or property is taxed by two or more tax authorities at the same time), a bilateral agreement between the tax authorities of the Mainland and Hong Kong - the Arrangement between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income - has been formulated and Hong Kong residents who meet the eligibility criteria may apply for the treatment under the Arrangement.

So, how is the status of Hong Kong residents recognized?01
Determination of Tax Resident Status in Hong Kong, China

Individuals who meet any of the following conditions are considered tax residents of Hong Kong, China:

a) Individuals ordinarily (ordinarily) resident in Hong Kong;

b) Individuals who stay in Hong Kong, China, for more than 180 days in a tax year or for more than 300 days in two consecutive tax years, one of which is the relevant tax year.

Note: The concept of "ordinarily resident" means that an individual resides in Hong Kong voluntarily and for the purpose of settlement, with a certain degree of continuity, and is ordinarily resident irrespective of the length of time he or she has resided in Hong Kong. Individuals who have a permanent residence in Hong Kong are generally regarded as "ordinarily resident" in Hong Kong.

The aforementioned residency determination documents do not refer to citizenship, but more toUsual Residenceas well aslength of stayAs a criterion for determination, it is consistent with Hong Kong's policy toTaxation on a territorial basisThe broad principles of the

This also means that individuals who have obtained Hong Kong resident status through various Hong Kong immigration schemes have already met the basic requirements for Hong Kong tax residents.

02
China Tax Resident Status Recognition Rules

According to the relevant regulations of Mainland China, the rules for recognizing China's tax resident status are:

(a) Residence in the country;

(b) Have no place of residence in the country, but have lived in the country for 183 days in a tax year.

(Note: Residence in the territory means habitual residence in the territory by virtue of domicile, family, economic interests.)

Therefore, if one does not want to pay taxes in Mainland China, one must be recognized as a"Non-resident individuals"The

It also means that after obtaining the Hong Kong permanent resident status, one still needs toSatisfy the requirement of having no residence in Mainland ChinaThe conditions of the And in a tax year, theAccumulated residence in the Mainland less than 183 daysThe

03
Mainland-Hong Kong dual identity, how is it taxed?

How should dual identity (Mainland-Hong Kong dual identity) be taxed for those who have acquired Hong Kong status but are still domiciled in the Mainland?

👉"Mainland-Hong Kong dual identity" employment in the Mainland

According to the scope of taxation in Hong Kong, income derived from employment in the Mainland is not required to be reported for tax purposes in Hong Kong, and tax is only payable in accordance with the relevant tax regulations in the Mainland, and there is no double taxation.

👉"Mainland-Hong Kong dual identity" employment in Hong Kong

This is only common for those who have emigrated to Hong Kong.

The majority of individuals with "Mainland-Hong Kong dual identity" have a fixed abode in the territory. "Having a residence in the territory means habitually residing in the territory for reasons of domicile, family and economic interests."

Therefore, unless the link with the Mainland is severed, they are still to be counted as tax residents of the Mainland.

In reality, HNWIs are not able to completely cut off their ties with China after acquiring offshore status, so they need to fulfill all the conditions in the planning of their domicile status and tax residency status in order to avoid losing out on tax planning.

If you would like to know more, please feel free to contact Timeless Group.