Hong Kong and Guernsey sign Double Taxation Agreement

Hong Kong has signed a comprehensive Double Taxation Agreement (DTA) with Guernsey.

The Hong Kong DTA was signed by Guernsey Chief Minister, Peter Harwood, who commented that this was a further important step in growing the business connections between Guernsey and the Far East.

Harwood said: “I am delighted to further strengthen our relationship with Hong Kong. The signing of this DTA, combined with the visit of the Chinese Ambassador to the UK to Guernsey this week, recognises the importance attached to Guernsey’s business relationship with the Far East. The agreement is expected to bring significant commercial benefits to our finance sector, resolving issues relating to potential double taxation, and leading to greater opportunities for new business.”

It is worth noting that a number of Guernsey-based firms have offices in Hong Kong, including such law firms as Mourant Ozannes and Ogier, fund administrator International Administration Group and fiduciary services providers Louvre, Nerine and Newhaven.

Filed under: HK as a Financial Centre, Offshore Legislation, Taxation

HK gazettes Tax Information Exchange Bill

The Inland Revenue (Amendment) Bill 2013 aimed at enabling Hong Kong to enter into tax information exchange agreements (TIEAs) with other jurisdictions where necessary was gazetted on April 12, 2013.

The TIE bill will be introduced into the Legislative Council on April 24.

This legislation should enhance the existing exchange of information (EoI) arrangements under comprehensive double taxation agreements (CDTAs). At present, under the Inland Revenue Ordinance (IRO), Hong Kong can only exchange tax information with another jurisdiction under the framework of such a bilateral CDTA.

A government spokesman said: “According to the Global Forum on Transparency and Exchange of Information for Tax Purposes of the Organization for Economic Co-operation and Development, the latest international EoI standard is that a jurisdiction should make available both CDTAs and TIEAs as instruments for EoI”. He added that the Global Forum has recommended that Hong Kong should put in place a legal framework for entering into TIEAs. “Given the international backdrop, it is time-critical to amend the IRO to put in place a legal framework which enables Hong Kong to enter into TIEAs, as an effort to demonstrate Hong Kong’s continued commitment to enhancing tax transparency”.

The spokesman explained that “the proposed legislative amendments aim to relax the tax types to be covered by the EoI arrangement under CDTAs and future TIEAs, and to enable the Commissioner of Inland Revenue to disclose information in response to an EoI request if the Commissioner is satisfied that such information relates to tax assessments in respect of any period after the date on which the relevant CDTA or TIEA comes into operation.”

Filed under: HK Law changes, International Business Environment, Offshore Legislation, Taxation

HK issues 2012-2013 Tax Returns

On April 2, Hong Kong’s Inland Revenue Department (IRD) issued some 180,000 profits tax returns, 120,000 property tax returns and 250,000 employer’s returns for the 2012-2013 year of assessment. Also, abound 2.32 million individual tax returns are to be issued on May 2, 2013.

In this year’s Budget, the Financial Secretary proposed a one-off reduction of 75% of profits tax, salaries tax and tax under personal assessment for 2012-2013, subject to a ceiling of HKD 10,000, which is USD 1,290. Upon enactment of the relevant legislation, the IRD will make the tax reduction in this year’s tax bills.

“Individuals with rental income, if eligible, can enjoy the reduction by electing personal assessment,” the IRD said. “They can make the election when completing their 2012-2013 tax returns for individuals. The department will check in each case whether the election will reduce the amount of tax payable, and assess each taxpayer in the way most advantageous to him.”

The IRD also noted that using eTAX services is simple and any registered taxpayer can log into it with his Taxpayer Identification Number and the eTAX password registered with the department or his digital certificate issued by a recognized certification authority.

Filed under: Business and Economy, Travel