The importance and impact of this treaty goes beyond Hong Kong residents, as foreign investment from mainland China has often been structured by offshore tax jurisdictions such as Hong Kong in response to the unfavourable tax treatment of foreign dividends and capital gains in mainland China. In addition, existing Chinese foreign exchange control legislation and legislation are also responsible for the use of investment structures outside China involving intermediary companies in Hong Kong. Therefore, once ratified, the treaty could have a significant impact on existing and future investment structures in Canada from mainland China via Hong Kong. However, the terms “fees” do not contain section 8 revenue (mail-order and air transport). 3. The provisions of Articles 6 (real estate income) to 20 (Other income) of this agreement do not apply to businesses, trusts or other businesses established in a contracting party that are, directly or indirectly, owned or controlled by one or more persons who are not established in that contracting party if the amount of tax collected on the income or capital of the corporation , the confidence or any other entity of this contracting party is substantially less than the amount that would be imposed by that contracting party (after taking into account a possible reduction or compensation of the amount of tax in any way, including a refund, repayment, contribution, credit or remuneration to the company, trust or company or any other person) if all shares of the company`s capital stock or any other entity, as may be the case, were advantageously owned by one or more persons who were residents of that party. (a) the imposition of a tax on amounts that are included in the income of a resident of that contracting party in respect of a partnership, corporation or other entity involving a resident of that contracting party; or three. Paragraph 1 applies to income from direct use, rental or use in another form of real estate, as well as income from the disposal of these properties.
Canada-Hong Kong Income Tax Agreement