Hong Kong's agreement with Mexico contains several favorable provisions, which are expected to boost closer economic and trade ties.
On 18 June 2012, Hong Kong signed a comprehensive double taxation agreement (CDTA) with Mexico, being the first CDTA Hong Kong has with a jurisdiction in the American continent. This brings the number of CDTAs Hong Kong has signed with other jurisdictions to twenty-five.
The CDTA with Mexico contains several favorable provisions, which are expected to boost closer economic and trade ties between Hong Kong and Mexico.
This alert summarizes the salient points of those provisions as applicable to Hong Kong residents. Appendix I to this alert also shows the status of Hong Kong’s current CDTA network and negotiation.
Who is covered by the CDTA
The CDTA only applies to persons who are residents of either Hong Kong or Mexico.
In this regard, a company that is incorporated or constituted under the laws of Hong Kong automatically qualifies as a Hong Kong resident.
For a company which is not so incorporated or constituted, it would be regarded as a Hong Kong resident only if it is “normally managed or controlled” in Hong Kong.
This residence test is also commonly used in other CDTAs Hong Kong has concluded.