PRESS RELEASE

(Source : Government Information Centre)

Order gazetted to implement the Comprehensive Agreement for Avoidance of Double Taxation with Belgium

********************************************************************************************

An Order made by the Chief Executive in Council to implement the Agreement with Belgium for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and on Capital is gazetted today (February 6). It will be tabled at the Legislative Council next Wednesday (February 11) for negative vetting.

This agreement is the first comprehensive agreement for the avoidance of double taxation concluded by the Hong Kong Special Administrative Region Government with another economy.

Subject to the completion of ratification procedures for both sides, the Hong Kong/Belgium agreement will apply with respect to Belgian taxes from January 1, 2004, and with respect to Hong Kong taxes from April 1, 2004.

Signed by the Secretary for Financial Services and the Treasury, Mr Frederick Ma, and the Belgian Minister of Finance, Mr Didier Reynders, in Hong Kong on December 10, 2003, the comprehensive agreement for double taxation avoidance (CDTA) represents an important milestone in Hong Kong's efforts in the area of CDTAs.

It will bring about tax savings to Hong Kong and Belgian investors doing business in each other's jurisdiction in respect of certain income, and provide a further level of certainty in tax liabilities. As a result, it will provide added incentives for businesses in Hong Kong and Belgium to enhance their cross-border investments or activities, thus fostering closer economic ties between the two places.

The Government began to explore the possibilities of concluding CDTAs with its major trading partners in 1998. It concluded a double taxation arrangement with the Mainland in 1998. In circumstances where CDTA discussions could not immediately proceed, the Government sought to conclude limited double taxation avoidance arrangements (DTAs) for revenues arising from international shipping/air transport. A total of 18 DTAs on airline income, five agreements on shipping income and one agreement on airline and shipping income have been concluded.

During 2004, the Government proposes to continue its CDTA discussions with countries outside the region and to start negotiations with some of Hong Kong's major regional partners.

Ends/Friday, February 6, 2004

NNNN