Recently, the Hong Kong Special Administrative Region (Hong Kong) Inland Revenue Department updated its Frequently Asked Questions (FAQs) to address individuals who may be considered residents in both Mainland China and Hong Kong. The update explains how to determine their tax residency status based on the tie-breaker rules under the Arrangement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (the "Comprehensive Arrangement").

As economic exchanges between the two regions become increasingly close, cross-border work and dual residence have become commonplace, with many people living a "Hong Kong work, Mainland China life" lifestyle. When an individual meets the residency criteria of both regions simultaneously, how the tax system applies, and the role of the tie-breaker rules, become crucial.