About two years ago, PwC together with some business chambers and professional bodies, flagged the double taxation problems being faced by Hong Kong employees working in China in certain circumstances to both the Chinese State Administration of Taxation (“SAT”) and Hong Kong's Inland Revenue Department (“IRD”) through different channels. Since then, these tax authorities have taken it very seriously with the common goal to resolve these problems through consultation. We are very pleased to see that the SAT has finally issued the Public Notice  No. 16 (“PN 16”) dated April 26, 2012 to address these problems in favour of the Hong Kong (and Macao) tax residents. PN 16 takes effect from June 1, 2012 and applies to income obtained after the effective date.