PRESS RELEASE

(Source : Government Information Centre)

Agreement for the Avoidance of Double Taxation on Shipping Income with the Netherlands enters into force

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Shipowners in Hong Kong and the Netherlands will only need to pay tax in either Hong Kong or the Netherlands on their income derived from the other area from international shipping business from 2002.

A Government spokesman said today (November 26), "In November last year, the HKSAR Government and the Netherlands Government signed an Agreement for the Avoidance of Double Taxation on Income, Profits, Gains or Capital of an Enterprise Operating Ships in International Traffic. The Order made by the Chief Executive in Council to give effect to the Agreement has passed through all necessary legislative procedures."

"The Agreement will apply in both HK and the Netherlands for any year of assessment or taxable year and period beginning on or after 1 January 2002. Upon the request of an enterprise of either area, the provisions of the Agreement shall also have effect for that enterprise for any year of assessment beginning on or after 1 April 1998 in HK, and for taxable years and periods beginning on or after 1 January 1998 in the Netherlands," the spokesman said.

The Agreement entered into force on October 17, 2001 when the Netherlands Government notified the HKSAR Government of the completion of the legal procedures on their side for bringing the Agreement into force.

"The Agreement provides tax exemption in one area for profits derived by an enterprise of the other area from international shipping business."

Shipowners in HK or the Netherlands will, as a result, not be subject to tax in the other area on the income they derive from international shipping business.

"Together with similar agreements/arrangements with the United States, the United Kingdom and the Mainland, and the confirmed provisions of reciprocal tax exemption with the tax authorities of New Zealand and the Republic of Korea, HK shipowners are exempt from tax on their international shipping income in five countries and the Mainland," the spokesman explained.

The HKSAR Government is discussing with other tax administrations arrangements for the avoidance of double taxation that will similarly benefit HK shipowners.

End/Monday, November 26, 2001

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