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Inland Revenue (Amendment)(No. 3) Bill 2009 to
be gazetted
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The Government will publish in the Gazette on June 26 the legislative
amendments to the Inland Revenue Ordinance (Cap. 112) (IRO) to enable
Hong Kong to adopt the latest international standard for exchange
of information (EoI) in a comprehensive avoidance of double taxation
agreement (CDTA).
The Financial Secretary announced
in his 2009-10 Budget that the Government would put forward legislative
proposals by the middle of this year to align our EoI arrangements
with the international standard.
A CDTA would normally include an
EoI article that provides for the exchange of information necessary
for the carrying out of the agreement between the two contracting
parties. The EoI article currently adopted in our CDTAs is based
on the 1995 version of the Organisation for Economic Cooperation
and Development (OECD) Model Tax Convention. According to this version,
the Inland Revenue Department (IRD) may refuse to collect and supply
the information requested by another contracting party if the department
does not need it for domestic tax purposes. Most economies have,
however, adopted the OECD 2004 version of the EoI article. This
version categorically states that the lack of domestic tax interest
does not constitute a valid reason for refusing to collect and supply
the information requested by another contracting party.
Hong Kong currently cannot adopt
the 2004 version of the EoI article because under the IRO, IRD cannot
collect any tax information unless it is for domestic tax purposes.
This legal constraint on IRD's information gathering power has been
a major obstacle to our CDTA negotiations because most economies
have adopted the 2004 version of the EoI article. This constraint
has reduced the number of our potential CDTA partners, and restricted
the progress of our negotiations. The legislative proposal aims
to amend the IRO to enable IRD to collect and disclose taxpayer
information requested by another contracting party for the taxation
of that party, even if IRD does not need the information for domestic
tax purposes.
"Despite our legal constraints,
Hong Kong has been very supportive of efforts by the international
community in promoting transparency in tax administration. As early
as in 2005, we openly endorsed OECD's Principles of Transparency
and Effective Exchange of Information at the OECD Global Forum on
Taxation held in Melbourne. The legislative proposal will give impetus
to our effort to expand our CDTA network and reaffirm Hong Kong's
commitment to tax transparency. In adopting the OECD 2004 version
of the EoI article in our CDTAs, we will adopt prudent safeguards
at different levels to protect individuals' right to privacy and
confidentiality of the information exchanged," a government
spokesman said.
The bill will be introduced into
the Legislative Council on July 8, 2009.
Ends/Wednesday, June 24, 2009
Issued at HKT 16:00
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