6 Sept 2023
Under most of the Hong Kong DTAs, “resident of Hong Kong” is defined as a company incorporated in Hong Kong and any other person constituted under the laws of Hong Kong. Except that of the Hong Kong/Japan DTA, under which “resident of Hong Kong” is defined as a company or any other person having a primary place of management and control in Hong Kong.
A Certificate of Resident Status (CoR) is a document issued by the Inland Revenue Department (IRD) to a Hong Kong resident who requires proof of resident status for the purposes of claiming tax benefits under the comprehensive double taxation agreements / arrangements (DTAs). Recently the IRD has revisited its approach to the issuance of CoR in the context of strengthened international tax cooperation and changing business environment. With effect from 12 June 2023, the process is adjusted such that the IRD will base its decision of whether a CoR can be issued on the plain definition of “resident of the Hong Kong” in the relevant DTA.
According to the previous administrative practice, the IRD would only issue CoR to a Hong Kong resident who had “sufficient economic nexus with Hong Kong”. But under the revised practice, much less information is required to be provided. An entity incorporated or established in Hong Kong should be able to obtain a CoR without being assessed on its economic substance in Hong Kong or required to provide full details of its establishment and business activities. Apparently, the change in the IRD’s approach would reduce the applicants’ compliance burden.
Following are the revised CoR application forms:
| DTA Partner | Company/Partnership/Trust /Body of Persons | Individual |
| The Mainland of China | IR1313A (06/2023) | IR1314A (06/2023) |
| Other Jurisdictions | IR1313B (06/2023) | IR1314B (06/2023) |
It is worth to note that the IRD has also formalised the existing administrative facilitation measures with respect to CoR applications under DTA between Hong Kong and The Mainland China and relating to the Circular of the State Taxation Administration on Matters Concerning “Beneficial Owners” in Tax Treaties (STA Circular 2018 No. 9). Hence, CoR application can be submitted in a bundle where:
- an investment in a Mainland China entity is owned via a multi-level holding structure; and
- the Hong Kong entity which directly owns the Mainland China investment does not qualify as a beneficial owner of a dividend income on its own, but an upper-level entity qualifies.
For more information, please contact Ms. Amie Cheung at amie.cheung@lccpa.com.hk