This provision says certain aircraft-operation income and related capital/assets of an airline of one Contracting Party are exempt from specified taxes in the other Contracting Party, on a reciprocal basis, and sets when the Article starts, ends, and may be replaced.
Specification of Arrangements (Government of the Republic of Korea concerning Air Services) (Double Taxation) Order(Cap. 112, section 49)(Enacting provision omitted—E.R. 6 of 2020)[7 June 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 9 of the Agreement between the Government of Hong Kong and the Government of the Republic of Korea concerning Air Services done, in duplicate at Seoul, in the Republic of Korea on 29 March 1996 in the English and Korean languages as specified in the Schedule and having effect according to the tenor of that Agreement. Schedule [s. 2]Article 9 of the Agreement between the Government of Hong Kong and the Government of the Republic of Korea concerning Air Services Done, in duplicate, at Seoul on the 29th day of March 1996 in the English and Korean languages. “ARTICLE 9 Avoidance of Double Taxation with respect to InternationalAir Traffic (1) For the purposes of this Article, (a) the term “revenues, gross receipts, income or profits derived from the operation of aircraft in international traffic” shall include revenues, gross receipts, income or profits from the operation of aircraft for the carriage of persons, livestock, goods, mail or merchandise including the sale of tickets for and the provision of services connected with such carriage, either for the airline itself or for any other airline;(b) the term “international traffic” means any transport by an aircraft operated by an airline of a Contracting Party, except when the aircraft is operated 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, in the case of the Republic of Korea, an airline substantially owned and effectively controlled by the Government of the Republic of Korea or its nationals. (2) Revenues, gross receipts, 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 revenues, receipts, income or profits imposed in the area of the other Contracting Party on a reciprocal basis in accordance with the laws and regulations of the latter Contracting Party. (3) Capital and assets of an airline of one Contracting Party relating to the operation of aircraft in international traffic shall not be subject to any taxes imposed by the other Contracting Party on a reciprocal basis in accordance with the laws and regulations of the latter Contracting Party. (4) The operation of aircraft in international traffic carried on by an airline of one Contracting Party shall be exempt from value added tax and any similar tax imposed by the other Contracting Party on a reciprocal basis in accordance with the laws and regulations of the latter Contracting Party. (5) This Article shall have effect in respect of taxes, other than withholding taxes, for the taxable year or year of assessment beginning on or after the first day of January in the year in which this Agreement enters into force. (6) The Article shall cease to have effect in respect of taxes, other than withholding taxes, for the taxable year or year of assessment beginning on or after the first day of January in the year in which this Agreement is terminated. (7) This Article shall be replaced by an Agreement for the avoidance of double taxation with respect to taxes on income and on capital providing for similar exemptions if and when such Agreement is concluded between the Contracting Parties.”.