Hong Kong Tax Alert: 24 May 2013
Provisions of the CDTA
Mutual Agreement Procedure (MAP)
Similar to all other CDTAs that Hong Kong has concluded, the CDTA contains a MAP Article. Under the MAP Article, if the actions of one or both contracting parties result, or will result, in a person being assessed to tax in a manner not in accordance with the provisions of the CDTA, such person can seek remedy by way of the MAP. This would generally involve such person presenting their case to the competent authority of their resident side within three years from the date of the first notification to them of the actions resulting in taxation not in accordance with the provisions of the CDTA.
The competent authority of the contracting party of which such person is a resident, will consider and attempt to resolve the case on its own if possible or, where necessary, endeavor to resolve the case with the competent authority of the other contracting party. Any agreement reached under the MAP shall be implemented notwithstanding any time limits specified in the domestic laws of the contracting parties.
Avoidance of double taxation
Where the income of a Hong Kong resident is subject to tax in both Hong Kong and Qatar, the Hong Kong resident may credit the tax paid in Qatar on the relevant income against the Hong Kong tax liability charged on the same income. The available tax credit is, however, limited to the Hong Kong tax charged on the same income.
Effective date of the CDTA
The CDTA will only come into force in the tax year following the calendar year in which the relevant ratification procedures are completed. Assuming that the ratification procedures can be completed in 2013, the CDTA shall then have effect as follows:
- For Hong Kong: for any year of assessment beginning on or after 1 April 2014
- For Qatar: for any income year beginning on or after 1 January 2014