Certain airline income, capital, and assets connected with international air traffic are exempt from specified taxes under the arrangement described here.
Specification of Arrangements (Government of the Kingdom of the Netherlands concerning Air Services) (Double Taxation) Order(Cap. 112, section 49)(Enacting provision omitted—E.R. 6 of 2020)[31 January 1997](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 the Kingdom of the Netherlands concerning Air Services done at The Hague on 17 September 1986, as amended by an exchange of letters between the two Governments on 9 December 1996 and 16 December 1996 as specified in the Schedule and having effect according to the tenor of that Agreement and the exchange of letters. Schedule [s. 2] Article 8A of the Agreement between the Government of Hong Kong and the Government of the Kingdom of the Netherlands concerning Air Services Done at The Hague on the 17th day of September 1986, as amended by an exchange of letters on 9 December 1996 and 16 December 1996. “ARTICLE 8A Avoidance of Double Taxation (1) Income or profits derived from the operation of aircraft in international traffic by an airline of one Contracting Party, including participation in a pool service, a joint air transport operation or an international operating agency, which are subject to tax in the area of that Contracting Party shall be exempt from income tax, profits tax and all other taxes on income or profits imposed in the area 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 taxes of every kind and description on capital and assets imposed in the area 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 subject to tax on gains only in the area of that Contracting Party.(4) For the purposes of this Article:(a) the term “income or profits derived from the operation of aircraft in international traffic” shall include income or profits from the operation of aircraft for the carriage of persons, livestock, goods, mail or merchandise including: (i) the lease of aircraft on a charter basis;(ii) the sale of tickets for and the provision of services connected with such carriage, either for the airline itself or for any other airline;(iii) interest on funds directly connected with the operation of aircraft in international traffic;(b) the term “international traffic” means any carriage by an aircraft except when such carriage 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 the Kingdom of the Netherlands, an airline substantially owned and effectively controlled by the Government of the Kingdom of the Netherlands or its nationals.(5) This Article shall not have effect as long as an Agreement for the avoidance of double taxation with respect to taxes on income or profits providing for similar exemptions shall be in force between the Contracting Parties.”.