Feelers put out abroad for more double taxation pacts

The Government says it is exploring agreements with several other countries aimed at helping employees and companies avoid double taxation on income in the wake of an agreement struck with Beijing earlier this month.

Secretary for the Treasury Kwong Ki-chi said yesterday Hong Kong and mainland tax officials had signed a memorandum for the avoidance of double taxation covering such sectors as shipping, aviation, land transport, permanent establishments, services and personal tax.

The arrangement is consistent with agreements made between the mainland and other governments, and is in line with provisions in the OECD's double taxation relief model.

'The arrangement will ease the concern and lower the tax liability of Hong Kong residents working and enterprises operating on the mainland,' Mr Kwong said.

He said the Government would also explore similar agreements with several other countries.

The arrangement needs to be passed by the Chief Executive in Council and the Provisional Legislative Council, and the arrangement is expected to be effective on April 1 in Hong Kong and July 1 on the mainland.

Under the deal, the profits of a Hong Kong enterprise would be taxable only in Hong Kong unless it operates on the mainland through a permanent establishment.