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MONDAY, SEPTEMBER 11,
1989
"IN ANY EVENT, MANY DEVELOPED
COUNTRIES ALREADY
OFFER
THEIR
A SOURCE IN
HONG
WILL
RESIDENTS UNILATERAL RELIEF ON INCOMES WHICH HAVE KONG. TO THE EXTENT THAT THIS IS SO, A DOUBLE TAXATION AGREEMENT ADDITIONAL NOT OF ITSELF PROVIDE ANY
INCENTIVE FOR INVESTMENTS IN HONG KONG," SIR PIERS NOTED.
TURNING TO THE SIGNING OF A RECIPROCAL TAX EXEMPTION AGREEMENT ON SHIPPING INCOME BETWEEN THE HONG KONG AND
STATES UNITED AGREEMENT GOVERNMENTS LAST MONTH, SIR PIERS SAID THE
SHOULD NOT BE
SEEN AS INDICATING
CHANGE OF POLICY IN
TO RELATION
BILATERAL
ARRANGEMENT.
A
"RATHER IT SHOULD BE SEEN AS AN EXCEPTIONAL MEASURE TO MEET A PARTICULAR PROBLEM," HE EMPHASISED.
THE NEED FOR THIS AGREEMENT AROSE FROM THE 1986 U.S. TAX REFORM TAXED ACT, WHICH CHANGED THE BASIS UPON WHICH FOREIGN SHIPOWNERS WERE
LOCAL SHIPPING INDUSTRY IN THE UNITED STATES, THEREBY AFFECTING THE ON TWO FRONTS.
FROM
EXEMPTION,
FIRSTLY, HONG KONG SHIPOWNERS WHO WERE EXEMPT PREVIOUSLY U.S. TAX BECAUSE THEIR SHIPS WERE REGISTERED IN TAX JURISDICTIONS
WHICH SUCH AS LIBERIA OR PANAMA,
ΤΟ PROVIDE RECIPROCAL FOUND THEMSELVES LIABLE TO THE U.S. TAX BECAUSE AS ARE RESIDENTS IN HONG KONG.
SHAREHOLDERS THEY
GROSS
"SECONDLY, FOREIGN OWNERS OF SHIP WERE, BY VIRTUE OF REGISTRATION OR INCORPORATION IN HONG HONG, LIABLE TRANSPORTATION TAX ON THEIR U.S. SHIPPING INCOME, HE SAID.
H
TO A
THE CHANGES HAD SERIOUS IMPLICATIONS FOR THE LOCAL SHIPPING VESSELS AT INDUSTRY AS THE NEW APPROACH ENCOURAGED THE REFLAGGING OF PRESENT REGISTERED IN HONG KONG TO COUNTRIES WHICH PROVIDED RECIPROCAL TAX EXEMPTION TO U.S. SHIPOWNERS, HE EXPLAINED.
UNDERMINE
THE AFFECT .
"IF
HAD NO ACTION
BEEN TAKEN THIS COULD ESTABLISHMENT OF THE HONG KONG SHIPPING REGISTER AND ADVERSELY THE VIABILITY OF LOCAL SHIPPING SUPPORT SERVICES, SUCH AS BROKERAGE, INSURANCE AND SO ON.
A "IN SHORT, THE FUTURE OF HONG KONG AS PUT AT SOME RISK, HE SAID.
Г1
MARITIME CENTRE WAS
A NEED TO OFFSET THE THE TAXATION LAWS OF
"AGAINST THIS BACKGROUND, THERE WAS OTHERWISE DAMAGING EFFECTS OF AN AMENDMENT TO ANOTHER COUNTRY, THE FINANCIAL SECRETARY SAID.
HE STRESSED THAT WHAT THE GOVERNMENT HAD DONE TO THE SHIPPING
OTHER INDUSTRY SHOULD NOT BE TAKEN AS A PRECEDENT BY
INDUSTRIES NOT FACED WITH THE SAME PROBLEM.
MUST HE
SIR PIERS SAID AS FINANCIAL SECRETARY, THIS MAIN CONCERN BE TO PRESERVE THE ESSENTIAL SIMPLICITY OF OUR TAXATION SYSTEM AND
TOO WAS THEREFORE NATURALLY RELUCTANT TO SEE
MANY EXCEPTIONS WHICH COULD ERODE THAT SIMPLICITY AND LEAD HONG KONG INTO UNCHARTED WATERS.
"NEVERTHELESS, I AM CONSCIOUS OF CHANGING CIRCUMSTANCES IN TO PROBLEMS THAT MIGHT
INTERNATIONAL TAXATION AND WE MUST BE ALERT ARISE FROM TIME TO TIME,** HE SAID.
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