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HK signs Dual Taxation Agreement with UK

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  1. #21

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    Quote Originally Posted by LuisHK:
    I'm not a US citizen so didn't research much the matter, yet I understand that US citizens must pay taxes on their offshore income, no matter where there are resident, so some may try to hide behind offshore corporations dealing offshore and not declare the profits to the IRS. Some are actually so afraid of the IRS they don't want their name to appear anywhere, even hiding behind nominees in HK - which might be explained by the way companies dealing in the US must disclose their ramifications if I believe the info I had to share when registering a HK Ltd to invest on the US stock market.

    If the IRS investigates a person, it might be inclined to ask other juridictions information about this person's holdings there, and it seems BVI tax treaty with the US didn't end up with much such information shared by the BVI authorities.
    US citizens are 'afraid' of the IRS because defrauding the government is a felony and people are being sentenced to 10 years+ in prison for hiding behind offshore companies. There is no tax treaty with the BVI but information is shared; with the new law (FATCA) banks and investment funds will be required to provide the US government with information on any US owners.

  2. #22

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    http://www.treas.gov/press/releases/docs/kingdom.pdf

    British Virgin Islands Double Tax Treaties

    Above are some details on the agreements between BVI and the US, yet I read a couple of times - possibly from unreliable sources - that very little information was leaked from the BVI as the conditions to give informations were quite stringent.

    As of US rules on white collar crimes or even audacious tax saving, indeed they look quite insane from where I'm from. Over here Madoff would have been out smoking cigars with his mates in less than 3 years - although he probably wouldn't have been able to play with that much money .

  3. #23

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    Quote Originally Posted by LuisHK:
    1As of US rules on white collar crimes or even audacious tax saving, indeed they look quite insane from where I'm from. Over here Madoff would have been out smoking cigars with his mates in less than 3 years - although he probably wouldn't have been able to play with that much money .
    That's why that way of life - looking the other way on tax evasion - is ending for everyone, not just for US citizens.

  4. #24

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    Interesting cautionary tale about UBS and Swiss Bank Accounts:


    Shortcut to: How A $200,000 UBS Account Grew Into A $21 Million Penalty - Janet Novack - Taxing Matters - Forbes


  5. #25

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    Interesting indeed, would like to read more on how he's been beating the index for so long !

    Besides there's no wonder so much money has been removed from Switzerland recently, the UBS legal case and the HSBC stolen files are wreaking serious havoc.

    Last edited by LuisHK; 24-09-2010 at 08:26 PM.

  6. #26

    Does anyone know how the DTA will affect dividends? I've tried reading the treaty (specifically Article 10) and, good grief, it's complicated!

    My situation is that I'm about to become non-resident in October (permanantly, touch wood . In additional to rental income, I have a UK limited company from which I pay myself dividends. Normally, I would be be careful not to pay too much to avoid going over the higher tax threshold (above which point I have the pleasure of giving 22% to HMRC - ).

    But HK doesn't have a dividend tax.

    So, what would happen if I decided to pay myself a great big dividend as a non-resident?

    As dividends are already 'taxed' (as the result of corporation tax being applied to company profits), so no additional liability would be applicable?

    T.


  7. #27

    twickers- right now? Even if you break UK tax residence, any UK source dividends paid to you are...still subject to UK tax.

    The Treaty isn't yet in force but I would anticipate it should be by April 2011.

    However, that being said, you actually are only limited to tax at source on any interest income and dividend income once non-UK tax resident due to the fact that HMRC will treat it as disregarded income. So, you basically will pay no tax on your dividends (due to the notional tax credit) and nothing more than what the bank withhold on your bank interest. Your rental income will still be subject to UK tax but as a non resident landlord you can apply to receive this gross (as it will be subject to 20% withholding if you don't). You will need to file TRs in the UK to declare the rental profits (or loss) and be taxed on this.

    Last edited by hongkongwonder; 25-09-2010 at 07:44 PM.
    twickers likes this.

  8. #28

    Thanks for your very useful reply hongkongwonder.

    It looks like it's going to be party time come April 2011

    I just need to make darn sure I don't become resident again!


  9. #29

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    Hi, apologies for digging up an old thread, but this seemed a reasonable place to post this.

    I'm trying to work out whether this agreement has any bearing on my situation.

    Basically, I'm moving back to the UK from HK in March to start a new job, having been here since Oct 2014 and therefore under a whole tax year (April-April). I've only recently realised that this could mean I get hit with an income tax bill from HMRC for my full period in HK, according to the gov.uk website.

    However, I'm not sure whether the fact that I've been paying income tax over here has any bearing on this, as per the dual tax agreement? Can anyone shed any light on this?

    There is also the Statutory Residence Test that was brought in fairly recently, which I think would class me as an over-seas resident -- but again I'm not sure if that has any bearing on my situation since I will have not been away for a full tax year.

    If it turns out that I would be considered a UK resident for the full time I was in HK, is there a work-around i.e. were I to come to some arrangement with my new employer whereby I 'officially' start in April and do not get paid until the new tax year, would that mean I dodge the bullet?


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