Hong Kong To Expand Network Of Double Taxation Treaties

by Mary Swire, Tax-News.com, Hong Kong

05 February 2004

After signing its first comprehensive double taxation agreement with Belgium in December, the government of the Special Administrative Region is to begin building a network of similar agreements in a bid to boost trade and investment opportunities for local and international business.

"We have been conducting negotiations with some European countries," a spokeswoman for the Financial Services and Treasury Bureau recently confirmed to Dow Jones Newswires. "Negotiations with some Asian countries have been planned for 2004," she added, without divulging which countries have been approached by the government.

At present, Hong Kong has a total of 18 DTAs on airline income, in addition to five agreements on shipping income, and one agreement on both airline and shipping income. However, the new policy of comprehensive agreements represents something of a shift in emphasis by the government on the business front, by looking beyond the territory's traditional economic ties with the Chinese mainland towards a more regional and global outlook.

"Many places in the region have already established a network of CDTAs," noted Secretary for Financial Services and the Treasury, Frederick Ma, on the completion of the deal with Belgium.

"Having such a network in place for Hong Kong will put us on a par with other places in the region that already have one, thereby further enhancing our competitiveness in attracting foreign investment," he observed.

Experts also point out that a network of double-tax agreements may have an additional benefit for Hong Kong by tempting Chinese firms to channel funds through the city en route to their ultimate destination.

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