HK set to sign tax treaty with France next month

PUBLISHED : Tuesday, 05 October, 2010, 12:00am
UPDATED : Tuesday, 05 October, 2010, 12:00am

Hong Kong and France will sign a taxation accord next month, leaving the city one treaty short of the 12 needed to fulfil international standards and prove it is not a tax haven.

The two sides are expected to sign the comprehensive double taxation agreement next month in Paris, French ambassador to China Herve Ladsous said in Hong Kong yesterday.

Hong Kong has signed tax treaties based on the latest OECD standards with 10 economies - including the mainland. It needs 12 to satisfy the Organisation for Economic Co-operation and Development requirements and prove it is not a tax haven.

France originally planned to sign the treaty with Hong Kong in May, but postponed at the last minute as the officials responsible were busy with Europe's debt crisis.

Ladsous yesterday said the treaties may boost trade and investment between the two and spur more French professionals to work in Hong Kong.

Hong Kong is already home to 12,000 French nationals - Asia's biggest French expatriate community - and that figure is growing by 100 a month.

'They all live happily here,' Ladsous said. 'They are from all walks of life.'

More than 700 French companies operate in Hong Kong, from sectors including financial services, luxury goods and aerospace, he said.

Last year, President Hu Jintao and French President Nicolas Sarkozy argued at the G20 summit over a list of global tax havens - that may have included Hong Kong and Macau. US President Barack Obama stepped in and eventually the leaders agreed. Hong Kong and Macau were not on the list, but were mentioned in a notation.

But yesterday, Ladsous was clear on whether Hong Kong is a tax haven. 'No, it is not. It has a preferential tax rate - which can be advantageous to certain people, but it is not a tax haven.'