The United States Department of State announced August 19 that it had notified the Hong Kong authorities of the suspension or termination of the agreement between the United States and Hong Kong for the reciprocal tax exemption for income derived from the international operation of ships. This action is in furtherance of The President’s Executive Order on Hong Kong Normalization (E.O. 13936).
The agreement, effective January 1, 1987, provided exemption for shipping income derived from operating income, time/voyage and bareboat charters, container rental and capital gains. Rev. Rul. 2001-48, 2001-2 C.B. 324. In the absence of an agreement, the domestic law of each country will apply to shipping income earned by a resident of the other.
Agreements relating to extradition and the transfer of sentenced prisoners have also been suspended or terminated as part of the same action.