More tax treaties needed for Hong Kong to take on Singapore, Ireland as aircraft leasing hub, industry players warn
The more double tax agreements a place has, the more attractive it is to firms – but city is lagging top two centres by some distance
Hong Kong’s bid to take on Singapore and Ireland as a centre for aircraft leasing will slow down if it does not increase double tax agreements that make it attractive for companies to do business in the city, industry players warned.
Such agreements between jurisdictions spare lessors from paying taxes on profits twice – in the place they were set up and also where they operate. So the more agreements there are, the more attractive a location is to the firms – Hong Kong has 40 agreements, while Ireland has more than 70 and Singapore, over 80.
“Double tax agreements are one of the big areas where it is going to take quite a long time to compete with Ireland and Singapore,” said Paul Sheridan, CEO of Dublin-based Accipter, owned by Hong Kong’s richest man Li Ka-shing’s CK Asset Holdings.
The aircraft leasing business is dominated by Ireland and Singapore, which have 85 per cent of the global market, but Hong Kong has been trying to muscle in since last year. In July 2017, it rolled out tax incentives to lure more such firms, cutting their corporate tax rate in half to 8.25 per cent.