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Publications and Press Releases :
Press Release
: News Archives
HK-Belgium agreement on avoidance of double taxation
on income
enters into force
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Residents in Hong Kong and Belgium can now claim tax relief or tax
savings on their income derived from each other's territory from
businesses, employment or investment starting from 2004 as the Agreement
for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with respect to Taxes on Income and on Capital entered into
force on October 7, 2004.
The Commissioner of Inland Revenue, Mrs Lau Mak Yee-ming, Alice
said today (October 21): "The Hong Kong Special Administrative
Region (HKSAR) Government and the Belgian Government signed the
agreement in December last year. The Order made by the Chief Executive
in Council to give effect to the agreement has passed through all
necessary legislative procedures.
The HKSAR Government received the notification from the Belgian
Government of the completion of the legislative process on its side
on October 7, 2004 when the agreement entered into force.
"The agreement will apply in Hong Kong for any year of assessment
beginning on or after April 1, 2004 and in Belgium in respect of
taxes charged on or after January 1, 2004," Mrs Lau said.
"The agreement seeks to eliminate double taxation instances
encountered by Hong Kong and Belgian investors through the allocation
of taxing rights and the provision of tax relief. It also formalises
the tax relief being offered by the two tax authorities unilaterally
at present, thereby providing a further level of certainty and stability
to potential investors. In some instances, taxes are reduced. This
will bring about tax savings as well as promote the flow of investment
between the two places," she continued.
In real terms, Belgian residents doing business in Hong Kong through
a permanent establishment situated in Hong Kong will have the relevant
Hong Kong income exempted from tax in Belgium. Ship and aircraft
operators resident in Hong Kong or Belgium will only be subject
to tax in either Hong Kong or Belgium on income they derive from
international traffic. Withholding rates of taxes on investment
income of dividend and interest, and on royalties income in Belgium
will be lowered as provided for under the agreement.
Mrs Lau further explained, "This agreement is the first of
its kind. It represents an important milestone in Hong Kong's own
programme of comprehensive double taxation agreements. Hong Kong
has concluded a double taxation arrangement with the Mainland in
1998 that deals with business income, income from personal services
and transportation income. On the international traffic side, which
is more susceptible to double taxation, Hong Kong has concluded
18 double taxation avoidance arrangements on airline income, five
agreements on shipping income and two agreements on airline and
shipping income."
The HKSAR Government is keen to establish a network of double taxation
agreements with its major trading and investment partners. Negotiations
with other tax administrations for such agreements are under way
or being scheduled.
Ends/Thursday, October 21, 2004
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