Hong Kong needs more double-tax deals, says industry
Agreements would help cut costs and improve city as a trade, financial and shipping centre
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Hong Kong needs to sign more tax-friendly treaties, develop its logistics-related infrastructure and increase the promotion of its shipping and aviation sectors to lure more foreign companies, senior transport executives said yesterday.
Tung Chee-chen, the chairman and chief executive of Orient Overseas (International) Ltd, pinpointed double taxation agreements as being of key importance. He said more such comprehensive pacts would "reduce companies' costs but also improve Hong Kong as a trade, financial and shipping centre".
Hong Kong shipping firms estimated they had to pay hundreds of millions of dollars a year extra in tax because Hong Kong has only signed a handful of comprehensive double-tax deals.
China Navigation, a John Swire & Sons shipping subsidiary, moved to Singapore in December 2009 after 138 years in Hong Kong partly because of the tax it would save because Singapore had signed more double-tax treaties. The lack of tax deals also hurts Orient Overseas Container Line, OOIL's shipping subsidiary.
Figures from the Inland Revenue Department show Hong Kong has signed comprehensive double-tax treaties with 20 jurisdictions, although six more are due to take effect in the 2013-14 tax year. Deals with seven other countries are pending.
By comparison, Singapore has signed comprehensive treaties with 69 countries, according to the city state's Inland Revenue Authority.
Arthur Bowring, the managing director of the Hong Kong Shipowners' Association, said there were several industry-specific double-tax agreements applicable to shipping or aviation although comprehensive agreements were best.
Tung said the government needed to "focus more of its efforts on negotiating more trade deals".
"What is needed is more of this kind of trump cards," he told about 150 people at an Ernst & Young-Hong Kong General Chamber of Commerce lunch.
On other developments, Tung said: "Whether it is the third runway, logistics parks or more container terminals … we must make sure we don't miss the opportunity."
Tung backed construction of a 10th container terminal but said there were land-related issues to consider.
He said it was "not possible" to build a container terminal "paying the residential price for land".
Tung said the importance of promoting the industry internationally should not be underestimated because "attracting large international companies to Hong Kong has a knock-on effect. The cluster effect plays a very important role … in capital growth and employment opportunities".
Stanley Hui Hon-chung, the Airport Authority's chief executive, supported Tung's comments, saying that while Guangzhou airport was building a fifth runway, you "can't stop people from becoming more competitive".
Instead, Hong Kong should continue to enhance its facilities. This included the development of the Cathay Pacific cargo terminal, a midfield passenger terminal costing HK$10.2 billion, 28 additional aircraft parking stands and a third runway.