To avoid double taxation, an arrangement was reached between mainland China and Hong Kong in 1988:

1.Income earned by Hong Kong enterprises from operating international or cross-border sea, land, and air transport in the mainland can be exempt from taxation in the mainland, and vice versa.

2.Hong Kong enterprises operating in the mainland must pay taxes in the mainland unless the profits are attributed to a permanent establishment in the mainland.

3.If a Hong Kong resident (including enterprises) has income that is taxable in both Hong Kong and the mainland, the income tax paid in the mainland can be claimed for credit, but the credit amount cannot exceed the tax payable on that income calculated according to Hong Kong tax regulations.

4.This does not include income such as dividends, interest, copyright taxes, or capital gains.

The agreement on avoiding double taxation between Hong Kong and the mainland has made it more convenient for individuals with transactions and work exchanges between Hong Kong and the mainland, saving a lot on taxes.