S.I. No. 17/2011 - Double Taxation Relief (Taxes on Income) (Hong Kong Special Administrative Region) Order 2011.

1. With reference to Article 3, paragraph 1(j)

(a) A partnership in the Hong Kong Special Administrative Region is a taxable entity.

(b) Nothing in this Agreement shall be construed as preventing Ireland from taxing amounts included in the income of a resident of Ireland with respect to a partnership in which the resident is a partner.

2. With reference to Article 4

A Common Contractual Fund established in Ireland shall not be regarded as a resident of Ireland and shall be treated as fiscally transparent for the purposes of granting tax treaty benefits.

3. With reference to Article 13, paragraph 4

Ireland confirms that, in accordance with

section 584

of the

Taxes Consolidation Act 1997

and subject to the provisions of that section, a reorganization or reduction of a company’s share capital shall not be treated as involving any disposal of the original shares or any acquisition of the new holding or any part of it; but the original shares (taken as a single asset) and the new holding (taken as a single asset) shall be treated as the same asset acquired as the original shares were acquired.

4. With reference to Article 13, paragraph 5

Where

(a) an individual domiciled in Ireland ceases to be a resident in Ireland,

(b) disposes of property acquired prior to the first day of the year in which he ceased to be resident in Ireland as mentioned in subparagraph (a) above, and

(c) then becomes resident again in Ireland within 5 years of ceasing to be so resident,

the provisions of paragraph 5 shall not affect the right of Ireland to tax the individual according to its law by reference to that disposal but the amount of the tax charged shall not exceed the amount of tax that would be charged on the amount of any gain arising on a deemed disposal by the individual of that property at market value on the day immediately before the first day of the year in which he ceased to be resident in Ireland as mentioned in subparagraph (a) above.

5. With reference to Article 24

It is understood that this Article does not require the Contracting Parties to exchange information on an automatic or spontaneous basis.

IN WITNESS WHEREOF, the undersigned, duly authorised thereto, have signed this Protocol.

DONE in duplicate at Dublin this 22 day of June 2010, in the English language.

For the Government of Ireland

Brian Lenihan

For the Government of the Hong Kong Special Administrative Region of the People’s Republic of China

K C Chan

GIVEN under the Official Seal of the Government,

11 January 2011.

BRIAN COWEN,

Taoiseach.

EXPLANATORY NOTE.

(This note is not part of the Instrument and does not purport to be a legal interpretation.)

This Order gives the force of law to the Agreement between Ireland and Hong Kong for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, which is set out in the Schedule to the Order. The effect of the Agreement is summarised below.

This Agreement, which was signed in Dublin on the 22nd June 2010, is comprehensive in scope and is based on the OECD Model Convention.

The taxes covered by the Agreement are, for Ireland, Income Tax, Income Levy, Corporation Tax and Capital Gains Tax: for Hong Kong, Profits Tax, Salaries Tax and Property Tax.

The Agreement provides for the allocation of taxing rights between Ireland and Hong Kong and for the granting of relief from double taxation with regard to items of income and capital gains which, under the laws of Ireland and the laws of Hong Kong, may under the terms of the Agreement be taxed in both countries.

Where both countries continue to have taxing rights, for example in the case of certain interest payments and royalties, business profits arising through a permanent establishment which a person resident in one country has in the other country, or in the case of capital gains arising from the disposal of immovable property, the Agreement provides that the country of residence of the recipient of the income or gain will give relief against its tax on the income or gains for the tax paid in the other country on the same income or gains. Irish direct investors (i.e. Irish companies holding 5% or more of the voting power of the paying company) in receipt of dividends from a Hong Kong company are granted credit for the tax paid by the Hong Kong company on the profits out of which the dividends are paid (known as credit for underlying tax).

Source State taxation of interest and royalties is restricted to 10% and 3% respectively. Exemptions from Source State taxation include interest beneficially owned by the Government and any statutory body, institution or fund wholly or mainly owned or appointed by the Government as may be agreed from time to time between the competent authorities of the Contracting Parties, and in the case of Ireland also includes the Central Bank, the National Treasury Management Agency, the National Pensions Reserve Fund, the National Asset Management Agency and in the case of Hong Kong also includes the Hong Kong Monetary Authority.

The Agreement also provides for safeguarding nationals and enterprises of one country against discriminatory taxation in the other country, for consultation between the competent authorities of the two countries for the purpose of resolving any doubts or difficulties arising as to the interpretation or application of the Agreement and for the exchange of such information between these authorities as is forseeably relevant for carrying out the provisions of the Agreement or of the domestic law of either country in relation to the taxes covered by the Agreement.

The Agreement will enter into force when each country notifies the other of the completion of its procedures for bringing the Agreement into force. It will thereupon have effect in both countries for tax periods in the following year.

6. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties exceeds, for whatever reason, the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting Party, due regard being had to the other provisions of this Agreement.

Article 13

Capital Gains

7. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest exceeds, for whatever reason, the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting Party, due regard being had to the other provisions of this Agreement.

Article 12

Royalties

Notice of the making of this Statutory Instrument was published in

“Iris Oifigiúil” of

21

st January

, 2011.

WHEREAS it is enacted by section 826(1) (as amended by

section 35

of the

Finance Act 2007

(No. 11 of 2007)) of the

Taxes Consolidation Act 1997

(No. 39 of 1997) that where the Government by order declare that arrangements specified in the order have been made with the government of any territory outside the State in relation to affording relief from double taxation in respect of income tax, corporation tax in respect of income and chargeable gains, capital gains tax or any taxes of a similar character imposed by the laws of the State or by the laws of that territory and, in the case of taxes of any kind or description imposed by the laws of the State or the laws of that territory, in relation to exchanging information for the purposes of the prevention and detection of tax evasion or granting relief from taxation under the laws of that territory to persons who are resident in the State for the purposes of tax, and that it is expedient that those arrangements should have the force of law, and that the order so made is referred to in Part 1 of Schedule 24A to the

Taxes Consolidation Act 1997

, then, subject to section 826 of that Act, the arrangements shall, notwithstanding any enactment, have the force of law as if such order were an Act of the Oireachtas on and from the date of the insertion of a reference to the order into Part 1 of Schedule 24A

AND WHEREAS it is further enacted by

section 826

(6) of the

Taxes Consolidation Act 1997

that where such an order is proposed to be made, a draft of the order shall be laid before Dáil Éireann and the order shall not be made until a resolution approving of the draft has been passed by Dáil Éireann

AND WHEREAS a draft of the following Order has been laid before Dáil Éireann and a resolution approving of the draft has been passed by Dáil Éireann

NOW, the Government, in exercise of the powers conferred on them by

section 826

(1) (as amended by

section 35

of the

Finance Act 2007

(No. 11 of 2007)) of the

Taxes Consolidation Act 1997

(No. 39 of 1997), hereby order as follows