Keywords: tax, dividend payments, Hong Kong listed companies, mainland China, state administration of taxation, SAT

In a reply from the State Administration of Taxation (SAT) of Mainland China to the Hong Kong Government dated 28 July 2011, the SAT clarified the arrangements in relation to tax payable to the Mainland China Government for dividends paid by non-foreign invested Mainland China companies listed in Hong Kong as follows:

  • Dividend payments to Hong Kong residents - for individual shareholders who are Hong Kong residents, they are subject to a withholding tax rate of 10% in general pursuant to the arrangement for the avoidance of double taxation signed between Mainland China and Hong Kong. They are not required to apply for entitlement to such specified tax rate.
  • Dividend payments to non-Hong Kong residents - for individual shareholders who are residents of other countries and whose home countries have reached an agreement with Mainland China on an applicable withholding tax rate higher or lower than 10%, they have to comply with the provisions under the relevant bilateral tax agreements regarding dividends received.

Copies of the SAT's letter (in Chinese) and the press release made by the Financial Services and the Treasury Bureau can be downloaded via the link below:

http://www.hkex.com.hk/eng/rulesreg/listrules/listletter/Documents/20110704.pdf

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