November 10 2020

United States Announces Termination of Shipping Agreement with Hong Kong

Source: IBFD Tax Research Platform News

On 20 October 2020, the US Internal Revenue Service (IRS) issued announcement 2020-40, communicating that the United States provided a written notification dated 18 August 2020 to the government of the Hong Kong Special Administrative Region on the termination of the Honk Kong - United States Shipping Tax Agreement (1989). The termination of the agreement shall take effect on 1 January 2021 and shall have effect for taxable years beginning on or after that date.

Under the Honk Kong - United States Shipping Tax Agreement (1989), income was exempt from tax in one contracting state for income derived from the international operation of ships by residents of the other contracting state.

According to paragraph 8 of the first note of the exchange of notes, either government may terminate the agreement by giving written notice of termination.