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"We have already amended the Inland Revenue Ordinance to enable us to implement the provisions of double taxation agreements on airline income.
He said that Hong Kong has entered into the first such an agreement with the Republic of Korea which was signed earlier this year.
"Similar agreements with three other countries, namely, New Zealand, Canada and the Netherlands have also been reached and formal signature is expected in the next few months. In the meantime, negotiations on double taxation provisions in ASAs are being held with a number of other countries as well.
Mr Kwong emphasised that double taxation relief provisions are bilateral arrangements between Hong Kong and each of the agreement countries. Only Hong Kong airlines and airlines of the agreement country are bound by the provisions.
He described as completely groundless claims made by some writers in recent press articles that "a number of airlines in Asia and Australia are believed to be facing higher tax bills in Hong Kong or even double taxation following the signing of the double taxation agreement on airline income with the Republic of Korea".
Mr Kwong said: "An airline which is not covered by a double taxation agreement will continue to be taxed in Hong Kong on exactly the same basis as at present, irrespective of whether it has any business in the corresponding agreement country or not.
"Nor is there any question of 'overseas international airlines paying more tax in Hong Kong, or they may have to pay Hong Kong taxes they have not been liable for before' - another concern raised by some tax practitioners recently."
Commenting on the desirability of negotiating comprehensive double taxation agreements, in the broader context, with other countries which may cover other sectors of business than the airline industry, Mr Kwong said that this is a complex subject and the Government will need to examine the implications carefully.
"But to prepare ourselves, we are now developing a model text for a comprehensive double taxation agreement. This is based on the model adopted by the Organisation for Economic Co-operation and Development.
"We will also draw reference from agreements concluded by countries in the to suit our Own region, including China, with appropriate modifications circumstances," said Mr Kwong.
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