The agreements all adopt the 2004 Organisation for Economic Co-operation and Development ("OECD") standards on the Exchange of Information, allowing the Hong Kong Inland Revenue Department to collect and disclose a taxpayer's information in response to requests made by Hong Kong treaty partners even when the information is not required for domestic tax purposes. These moves are steps taken by the Hong Kong government towards meeting the internationally agreed standards set by the OECD for exchange of information.
Similar to the other comprehensive double tax agreements, the two newly signed comprehensive double tax agreements will help minimise the double taxation burdens on individuals and enterprises and eliminate uncertainties over tax liabilities.
This should improve the business environment and facilitate flows of trade, investment and talent between Hong Kong and its trading partners, thereby enhancing Hong Kong's position as an international business and financial centre.
On the other hand, due to the expansion of the comprehensive double taxation agreement network of Hong Kong under the new regime for exchange of information, the transparency of tax information will inevitably increase potential exchange of information between Hong Kong and its trading partners.
Individuals or enterprises wishing therefore to claim a treaty benefit should ensure that the arrangements or transactions put in place can withstand potential challenge by tax authorities around the globe.
OLN's Corporate Commercial Practice Group regularly advises clients on tax issues and good practice guidelines for regulatory compliance. We are happy to give you further advice and/or required strategic overview on the above topic as required.
This article is for information purposes only. Its contents do not constitute legal advice and readers should not regard this article as a substitute for detailed advice in individual instances.