The IRD views its more stringent approach to granting TRCs as a measure to prevent treaty abuse and for Hong Kong to be regarded as a responsible treaty partner.
The IRD clarified its view that “beneficial ownership” is a pre-requisite for granting the preferential tax treatment in the passive income articles of a DTA. Accordingly, if a company is unable to meet all the criteria of the relevant article of the DTA, including the requirement to be the beneficial owner of the income, the IRD may refuse to issue a TRC.
Taxpayers need to understand the IRD’s current practices and requirements before submitting their applications for TRCs, to ensure a successful and efficient process.
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