Hong Kong Tax News Flash
January 2026, Issue 1
Hong Kong clarifies determination of individual tax residence under tax arrangement with Chinese Mainland
The Hong Kong Inland Revenue Department (IRD) has recently updated the frequently asked questions (FAQs) on the comprehensive double taxation arrangement between Hong Kong Special Administrative Region (Hong Kong) and the Chinese Mainland (HK / Chinese Mainland CDTA). The updates clarify the determination of tax residence status in cases where an individual qualifies as a resident of both sides at the same time (i.e. tie-breaker rules). Specifically, the IRD uses individuals who hold domiciliary registration (also known as household registration or ‘hukou’) in the Chinese Mainland and who have been admitted to work in Hong Kong under a talent admission scheme as examples to illustrate how the rules apply in practice.
This news flash summarises the updated FAQs and our observations thereon. Determining tax residence is complex from both technical and practical perspectives. Even if an individual is regarded as a tax resident of one side under the HK / Chinese Mainland CDTA, this does not necessarily mean that they are not subject to tax in the other side. It is important to conduct a detailed, case-by-case analysis of the tax implications and compliance requirements for different types of income, taking into account the respective tax laws of Hong Kong and the Chinese Mainland, as well as the HK / Chinese Mainland CDTA. If you have any questions about the matters covered in this news flash, please seek professional advice tailored to your specific circumstances.
Contact us
South China and Hong Kong Tax Leader, China M&A Tax Leader, PwC Hong Kong
Tel: +[852] 2289 5616
South Private Clients and Family Office Tax Leader, PwC Hong Kong
Tel: +[852] 2289 3816
