The Agreement between the Government of Canada and the Government of the Hong Kong Special Administrative Region of the People’s Republic of China (the Treaty), was signed on November 11, 2012, entered into force on October 29, 2013.
While Canada has had a tax treaty with China since 1986, this treaty does not apply to Hong Kong. As such, the Treaty has seemed long overdue for Canadian companies with related entities in Hong Kong and should provide them at least some relief and certainty going forward.
The Treaty comes into effect on January 1, 2014 for tax withheld at source and for taxation years beginning after January 1, 2014 in respect of other Canadian taxes. As noted below, it also will also enable Canadian and Hong Kong based related companies to request assistance under the mutual agreement procedure thereby resolving any economic or juridical double taxation and to consider advance pricing arrangements (APAs).