A tax expert has warned Hong Kong companies with European interests to prepare for liabilities arising from European economic and monetary union (Emu).
Price Waterhouse tax partner Colin Farrell said some of the tax effects of the Emu - which starts on January 1 - would fall into this year.
'It is important to appreciate that the impact of the Emu will be immense and that it will not be tax neutral,' Mr Farrell said.
'The tax impact will not simply be obvious immediate effects of transition to the euro, such as the recognition of foreign exchange differences.
'The less obvious indirect effects of price transparency and the removal of foreign-exchange risk are perhaps even more critical.' This could range from transfer pricing risks to the costs of currency conversion and treatment of certain bonds and options.
