The United States has tax treaties with a number of countries. Under these contracts, residents (not necessarily citizens) of foreign countries are taxed at a reduced rate or exempt from U.S. tax on certain income they receive from sources located in the United States. These reduced rates and exemptions vary by country and income. Under the same conventions, U.S. residents or citizens are taxed at a reduced rate or are exempt from foreign taxes on certain items of income they receive from foreign sources. Most income tax treaties include a so-called “savings clause” that prevents a U.S. citizen or resident from using the provisions of a tax treaty to avoid taxing U.S. beneficiaries. In order to mitigate double taxation of income, the provisions on the relief of double taxation have been created. Double taxation relief is accessible in two ways, one is unilateral relief and the other is bilateral relief.

The Indian government has signed a double taxation treaty, a bilateral agreement with more than 150 countries, to offer double taxation relief to Indian citizens and residents. The amount of relief you receive depends on the UK`s “double taxation treaty” with the country where your income comes from. The relief of double taxation provided for in Article 90 can only be claimed by residents of the countries that have concluded the Agreement. If a resident of other countries wishes to apply for relief related to the phenomenon of double taxation, he must obtain a certificate of tax residence (CVR) from the government of a particular country. A 2013 study by Business Europe indicates that double taxation remains a problem for European multinationals and a barrier to cross-border trade and investment. [9] [10] The particular problems are the restriction of interest deductibility, foreign tax credits, permanent establishment issues and different reservations or interpretations. Germany and Italy were identified as the Member States with the highest number of double taxation cases. HMRC has guidelines for claiming double taxation relief if you are a double resident. Double taxation is the collection of taxes by two or more jurisdictions on the same income (in the case of income taxes), assets (in the case of capital taxes) or financial transactions (in the case of sales taxes).

Proponents of double taxation point out that without taxes on dividends from dividends they receive from owning large amounts of common shares, wealthy individuals could live a good life, but essentially wouldn`t be able to pay taxes on their personal income. In other words, ownership of shares could become a tax haven. Proponents of dividend taxation also point out that dividend payments are voluntary shares of corporations and that, therefore, corporations are not required to have their income “doubly taxed” unless they choose to pay dividends to shareholders. The term “double taxation” may also refer to the taxation of double income or activity. For example, corporate profits can be taxed first if they are generated by the company (corporation tax) and again if the profits are distributed to shareholders in the form of a dividend or other distribution (dividend tax). Despite this, the Government of the Hong Kong Special Administrative Region (HKSARG) recognizes that the conclusion of comprehensive double taxation agreements/arrangements (DTAs) with our trading partners is beneficial. A DTA provides investors with certainty about the taxation rights of the contracting parties; helps investors better assess their potential tax obligations for economic activities; and further encourages foreign companies to do business in Hong Kong, as well as Hong Kong companies to do business abroad. Therefore, it was HKSARG`s policy to establish a DTA network that would minimize double taxation of Hong Kong residents and residents of the DBA partner. Hong Kong has actively involved its trading partners in the negotiation of DTAs (which cover different types of income). To avoid these problems, countries around the world have signed hundreds of double taxation avoidance agreements, often based on models from the Organisation for Economic Co-operation and Development (OECD). In these agreements, the signatory states agree to limit their taxation of international transactions in order to increase trade between the two countries and avoid double taxation. The HKSARG welcomes your views on the general double taxation policy and the choice of negotiating partners.

Returns should be addressed to: Double taxation is a tax principle that refers to income tax paid twice on the same source of income. This can happen when income is taxed at both the business and personal level. Double taxation also occurs in international trade or investment when the same income is taxed in two different countries. This can happen with a 401k loan. Shipping revenue is another issue. Hong Kong has amended the legislation to provide for reciprocal tax exemption for maritime income from 1 April 1998 in order to allow ship operators to benefit from the tax relief offered by places with similar legislation on reciprocal tax exemption. At the same time, Hong Kong has started negotiations on double taxation relief for ship income with other countries that do not provide for reciprocal tax exemption in their legislation or, even if there are mutual exemption provisions, prefer to conclude a bilateral agreement. (During a transitional period, some States have separate provisions. [8] You can offer any non-resident account holder the choice of tax arrangements: either (a) disclosure of information as above, or (b) deduction of local tax on interest income at source, as is the case for residents). Hong Kong adopts the territoriality tax base, with only income/profits earned in Hong Kong being subject to tax and those from premises from a source outside Hong Kong are not taxed in Hong Kong in most cases. Therefore, Hong Kong residents generally do not suffer from double taxation. Many countries that tax their residents worldwide also grant their residents operating in Hong Kong a one-sided tax credit for all Hong Kong taxes paid on Hong Kong income/profits.

Hong Kong allows a deduction for foreign taxes paid on the basis of turnover on income that is also subject to tax in Hong Kong. Companies operating in Hong Kong therefore generally have no problem with double taxation of income. You cannot claim this relief if the UK Double Taxation Convention requires you to collect taxes from the country of origin of your income. Jurisdictions may enter into tax treaties with other countries that establish rules to avoid double taxation. These agreements often contain rules for the exchange of information to prevent tax evasion – for example, if a person applies for a tax exemption in one country because of their non-residence in that country, but does not declare it as foreign income in the other country; or who is requesting local tax relief on a foreign withholding tax that has not actually taken place. [Citation needed] Double taxation often occurs because companies are considered separate legal entities from their shareholders. As a result, businesses pay taxes on their annual income, just like individuals. When companies distribute dividends to shareholders, these dividend payments entail tax obligations for the shareholders they receive, even if the profits that provided the money needed to pay the dividends were already taxed at the company level. Contact HM Revenue and Customs (HMRC) or get professional tax assistance if you are unsure or need help with double taxation. Due to the international nature of air operations, airlines are more vulnerable to double taxation than other taxpayers. As the Commission might take longer to negotiate, Hong Kong`s policy had been to include double taxation relief on flight revenues in the bilateral air transport agreements negotiated between Hong Kong and aviation partners. .