The Inland Revenue (Amendment) (No. 6) Ordinance 2018 (the Amendment Ordinance), enacted on 13 July 2018, was gazetted by the government on 26 October 2018. Among other things, the Amendment Ordinance provides the following new requirements relating to double taxation relief:
- the relief under section 8(1A)(c) of the Inland Revenue Ordinance (Cap. 112) (IRO) does not apply to income derived by a taxpayer from services rendered in a territory with which Hong Kong has concluded a tax treaty or arrangement (the treaty). For income derived from services rendered in such a territory, the taxpayer will be entitled to claim credit in respect of foreign tax payable on the income under section 50 of the IRO;
- the relief under section 8(1A)(c) or foreign tax credit granted under section 50 of the IRO must not exceed the relief that would be allowed had the taxpayer taken reasonable steps to minimize his foreign tax liability under the laws of the foreign territory or the treaty concerned; and
- if the relief under section 8(1A)(c) or tax credit under section 50 of the IRO is granted to a taxpayer and, subsequently, such relief or credit becomes excessive as a result of an adjustment to his foreign tax liability, the taxpayer is required to issue a written notice to the Commissioner within 3 months after the adjustment is made.
The above requirements apply to salaries tax payable for the year of assessment beginning on or after 1 April 2018 (i.e. from 2018/19 onwards).