AI-assisted research summary: Airlines of one Contracting Party get exemptions from certain taxes on aircraft-related income, capital, assets, and gains, subject to specified conditions and an exception for similar double-taxation agreements.
Specification of Arrangements (Government of Canada concerning Air Services) (Double Taxation) Order(Cap. 112, section 49)(Enacting provision omitted—E.R. 6 of 2020)[27 September 1996](Format changes—E.R. 6 of 2020) 1. Declaration under section 49 For the purposes of section 49 of the Ordinance it is declared that the arrangements referred to in section 2 have been made with the Government of a territory outside Hong Kong with a view to affording relief from double taxation in relation to income tax and any tax of a similar character imposed by the laws of that territory, and that it is expedient that those arrangements should have effect. 2. Arrangements specified The arrangements mentioned in section 1 are in Article 8A of the Agreement between the Government of Hong Kong and the Government of Canada concerning Air Services done at Hong Kong on 24 June 1988 as amended by an exchange of notes between the two Governments on 23 May 1996 and 1 August 1996 as specified in the Schedule and having effect according to the tenor of that Agreement and the exchange of notes. Schedule [s. 2] Article 8A of the Agreement between the Government of Hong Kong and the Government of Canada concerning Air Services Done at Hong Kong on the 24th day of June 1988 as amended by an exchange of notes on 23 May 1996 and 1 August 1996. “ARTICLE 8A Avoidance of Double Taxation (1) Profits or income from the operation of aircraft in international traffic derived by an airline of one Contracting Party, including participation in inter-airline commercial agreements or joint business ventures, shall, if they are subject to tax in the area of that Contracting Party, be exempt from any tax on profits or income imposed by the Government of the other Contracting Party.(2) Capital and assets of an airline of one Contracting Party relating to the operation of aircraft in international traffic shall be exempt from all taxes on capital and assets imposed by the Government of the other Contracting Party.(3) Gains from the alienation of aircraft operated in international traffic and movable property pertaining to the operation of such aircraft which are received by an airline of one Contracting Party shall be exempt from any tax on gains imposed by the Government of the other Contracting Party.(4) In this Article:(a) the term “profits or income” includes gross receipts and revenues derived directly from the operation of aircraft in international traffic, including: (i) the charter or rental of aircraft;(ii) the sale of tickets or similar documents, either for the airline itself or for any other airline; and(iii) interest from earnings provided that such earnings are related to the operation of aircraft in international traffic;(b) the term “international traffic” means the transportation of persons and/or cargo (including mail) except when such transportation is solely between places in the area of the other Contracting Party;(c) the term “airline of one Contracting Party” means, in the case of Hong Kong, an airline incorporated and having its principal place of business in Hong Kong and, in the case of Canada, an airline resident in Canada for the purposes of income taxation.(5) The above provisions shall not have effect as long as an Agreement for the avoidance of double taxation with respect to taxes on income providing for similar exemptions shall be in force between the two Contracting Parties.(6) This Article shall have effect:(a) for Hong Kong, for the years of assessment commencing on or after 1 April 1994;(b) for Canada, for the 1994 taxation year and subsequent years.”.