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HMRC internal manual

Double Taxation Relief Manual

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HM Revenue & Customs
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Double Taxation Relief Manual: Guidance by country: Hong Kong Air transport

Prior to the comprehensive agreement having effect, there was an agreement between the United Kingdom and Hong Kong which covered air transport. This was a double taxation article (published as SI1998/2566) which was part of the general Air Services Agreement between the United Kingdom and Hong Kong.

The relevant part of the Article reads:

“(3) Income or profits derived from the operation of aircraft in international traffic by an airline of one Contracting Party, including any income or profits attributable to its participation in a pool, joint business or international operating agency, and proportionate to its share in the pool or joint operation, which are subject to tax in the area of that Contracting Party, shall be exempt from tax imposed in the area of the other Contracting Party.

(4) For the purpose of this Article:

(a) interest on funds directly connected with the operation of aircraft in international traffic shall be regarded as profits from the operation of such aircraft;

(b) the term “operation of aircraft” shall include:

(i) the carriage by air of persons, baggage, livestock, goods, mail or merchandise;  


(ii) the sale of tickets or similar documentation connected with such carriage, either for the airline or for any other airline;  


(iii) the incidental rental or lease of aircraft on a charter basis;”.  

Article 8 of the comprehensive agreement now deals with air transport and the Article quoted above no longer applies.