By conforming to the OECD standard, Hong Kong's tax system further enhances the territory's reputation as a well-regulated and trusted business hub and is likely to spur more Hong Kong company formations.
Hong Kong (PRWEB) April 29, 2010
Hong Kong has realigned its tax policy to support the Organization for Economic Co-operation and Development 's (OECD's) legal framework for the international exchange of tax information. Under the Inland Revenue (Amendment) Ordinance 2010, Hong Kong’s tax department will disclose information upon a legitimate and justified request from its treaty partners, even if the department has no domestic tax interest in such information. Hong Kong's tax policy amendment conforms to the international standard on exchange of tax information that was developed by the OECD and endorsed by the UN and G20 in 2009.
GuideMeHongKong.com predicts that Hong Kong's image as a trusted financial center will be further enhanced due to its realigned tax policy. According to Jacqueline Low, a senior staff member of the firm that runs the GuideMeHongKong.com site, "Trust and transparency play an integral role in Hong Kong’s position as a major financial center and regional business hub. Although the OECD does not classify Hong Kong as a tax haven, the territory has faced criticism due to its low tax rates and lack of tax information exchange arrangement. By conforming to the OECD standard, Hong Kong demonstrates its commitment to tax transparency and building a responsible tax system."
Most tax information exchange agreements between jurisdictions take the form of bilateral tax treaties. A jurisdiction has to sign 12 agreements on exchange of information in order to meet the OECD standard. In this regard, Hong Kong has signed agreements with the Netherlands, Indonesia, New Zealand, Switzerland and Brunei. Hong Kong has also reached an agreement-in-principle with Austria, Hungary, France, Ireland, Liechtenstein and Japan. Hong Kong has also started negotiations with other countries.
GuideMeHongKong.com further predicts that by expanding its double taxation treaty network, Hong Kong improves its trade and investment appeal for foreign investors. By signing comprehensive DTAs with the world's major countries, Hong Kong also serves to strengthen its position as an economic hub of Southeast Asia. DTAs break down tax barriers that obstruct cross-border flow of trade, investment, technical know-how and expertise. "The DTAs not only help in elimination double taxation of income but also help taxpayers know the potential limits of their tax liabilities in other countries. Business enterprises can benefit from these tax treaties through Hong Kong company registration. By conforming to the OECD standard, Hong Kong's tax system further enhances the territory's reputation as a well-regulated and trusted business hub and is likely to spur more Hong Kong company formations", added Ms. Low.
More information about Hong Kong's tax system can be found at http://www.guidemehongkong.com/tax/c753-hong-kong-tax-system.htm.
Launched in 2009, GuideMeHongKong.com is a Hong Kong-focused portal that provides comprehensive, accurate and current information about Hong Kong company formation, taxation, and relocation topics to global business professionals and organizations.