(February 23, 2015)
On February 23, 2015 the Inland Revenue Department of Hong Kong issued a press release stating that the 2nd Protocol amending the the agreement between Hong Kong and Vietnam for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income has entered into force on January 8, 2015.
The 2nd Protocol amends the Article regarding the Exchange of Information as follows:
“The text of Article 25 of the Agreement is deleted and replaced by the following:
1. The competent authorities of the Contracting Parties shall exchange such information as is foreseeably relevant for carrying out the provisions of this Agreement or to the administration or enforcement of the domestic laws of the Contracting Parties concerning taxes covered by this Agreement, insofar as the taxation thereunder is not contrary to the Agreement. The exchange of information is not restricted by Article 1.
2. Any information received under paragraph 1 by a Contracting Party shall be treated as secret in the same manner as information obtained under the domestic laws of that Party and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to the taxes referred to in paragraph 1. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions, including, in the case of the Hong Kong Special Administrative Region, the decisions of the Board of Review. Information shall not be disclosed to any third jurisdiction for any purpose.
3. In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting Party the obligation:
a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting Party;
b) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting Party;
c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy (ordre public).
4. If information is requested by a Contracting Party in accordance with this Article, the other Contracting Party shall use its information gathering measures to obtain the requested information, even though that other Party may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Contracting Party to decline to supply information solely because it has no domestic interest in such information.
5. In no case shall the provisions of paragraph 3 be construed to permit a Contracting Party to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person.”
Based on Article 3 of the Protocol the fact that the Protocol came into force on January 8, 2015 means that the Provisions of the Protocol shall have effect:
a) in the Hong Kong Special Administrative Region:
in respect of Hong Kong Special Administrative Region tax, for any year of assessment beginning on or after April 1, 2016;
b) in Vietnam:
(i) with regard to taxes withheld at source, in respect of amounts paid or credited on or after January 1, 2016; and
(ii) with regard to other taxes, in respect of taxable years beginning on or after January 1, 2016.
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