DOUBLE TAX TREATIES between Hong Kong and Belgium and revised double tax treaties between Hong Kong and the mainland could provide financial benefits for companies operating in each of the jurisdictions.
Double taxation situations arise when two or more taxes may need to be paid for the same asset or financial transaction due to an overlap between different countries' tax laws and jurisdictions. The liability is often mitigated by 'tax treaties' between countries.
Olivier Willez, a lawyer and tax expert with Belgian law firm Loyens Advocaten-Avocats, said the new Hong Kong/mainland double taxation arrangement further positioned Hong Kong as the regional gateway for foreign investments into the mainland.
The potential tax benefits offered by this arrangement will especially promote Hong Kong as a tax-efficient lending base and an intellectual property holding jurisdiction. Combined with the tax arrangement between Belgium and Hong Kong, this new arrangement could encourage more Belgian investors to route their investments into China through Hong Kong.
Mr Willez said as a result of this new arrangement, cross-border financing arrangements and transfer of technical know-how and patents between Hong Kong and the mainland would be enhanced. Cross-border restructuring through Hong Kong would also be facilitated.
He said international and Belgian investors should now evaluate whether and how they could directly benefit from this new arrangement.
