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- 1. Subject to the provisions of the laws of the Hong Kong Special Administrative Region relating to the allowance of a credit against Hong Kong Special Administrative Region tax of tax paid in a jurisdiction outside the Hong Kong Special Administrative Region (which shall not affect the general principle of this Article), United Kingdom tax paid under the laws of the United Kingdom and in accordance with this Agreement, whether directly or by deduction, in respect of income derived by a person who is a resident of the Hong Kong Special Administrative Region from sources in the United Kingdom, shall be allowed as a credit against Hong Kong Special Administrative Region tax payable in respect of that income, provided that the credit so allowed does not exceed the amount of Hong Kong Special Administrative Region tax computed in respect of that income in accordance with the tax laws of the Hong Kong Special Administrative Region.
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- 2. Subject to the provisions of the law of the United Kingdom regarding the allowance as a credit against United Kingdom tax of tax payable in a territory outside the United Kingdom or, as the case may be, regarding the exemption from United Kingdom tax of a dividend arising in a territory outside the United Kingdom (which shall not affect the general principle hereof):
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- (a) Hong Kong Special Administrative Region tax payable under the laws of the Hong Kong Special Administrative Region and in accordance with this Agreement, whether directly or by deduction, on profits, income or chargeable gains from sources within the Hong Kong Special Administrative Region (excluding in the case of a dividend tax payable in respect of the profits out of which the dividend is paid) shall be allowed as a credit against any United Kingdom tax computed by reference to the same profits, income or chargeable gains by reference to which the Hong Kong Special Administrative Region’s tax is computed;
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- (b) a dividend which is paid by a company which is a resident of the Hong Kong Special Administrative Region to a company which is a resident of the United Kingdom shall be exempted from United Kingdom tax when the conditions for exemption under the law of the United Kingdom are met;
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- (c) in the case of a dividend not exempted from tax under sub-paragraph (b) above (because the conditions for exemption under the law of the United Kingdom are not met) which is paid by a company which is a resident of the Hong Kong Special Administrative Region to a company which is a resident of the United Kingdom and which controls directly or indirectly at least 10 per cent of the voting power in the company paying the dividend, the credit mentioned in sub-paragraph (a) above shall also take into account the Hong Kong Special Administrative Region’s tax payable by the company in respect of its profits out of which such dividend is paid.
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- 3. For the purposes of paragraphs 1 and 2, profits, income and gains owned by a resident of a Contracting Party which may be taxed in the other Contracting Party in accordance with this Agreement shall be deemed to arise from sources in that other Party.