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Following is the speech by the Secretary for Financial Services and the Treasury, Professor K C Chan, at the signing ceremony of the comprehensive agreement for avoidance of double taxation between Hong Kong and the Netherlands today (March 22):
Minister De Jager, distinguished guests, ladies and gentlemen,
Good afternoon. It gives me great pleasure to welcome you all to the signing ceremony today, in particular to the Dutch delegation led by Minister De Jager.
Hong Kong and the Netherlands have a long history of close bilateral economic ties. The Netherlands is our fourth largest trading partner among the European Union Member States. Our bilateral trade has increased by about 8% per annum during 2004 to 2008. Close to 9% of the Netherlands' trade with the Mainland of China now comes through Hong Kong. The Netherlands is also a significant investor in Hong Kong, ranking third in the league of source countries of external investment in Hong Kong. There are now over 170 Dutch companies in Hong Kong, spreading across different sectors of our economy.
Though Hong Kong and the Netherlands are miles apart geographically, we share many characteristics in common. We are both strategic hubs for global trade and economic activities serving a vast hinterland. We have the busiest airports and container seaports. We are among the freest economies in the world, supported by sophisticated private enterprises and a vibrant and talented workforce. These make us natural partners over a number of areas for international co-operation, including economic, trade, investment and business. It is against such backdrop that we are going to sign the comprehensive agreement for avoidance of double taxation (CDTA) today, which will certainly be beneficial to further the economic ties between the two places.
The Hong Kong-Netherlands CDTA is the first agreement we conclude with an Organisation for Economic Co-operation and Development (OECD) member country adopting the latest international standard on exchange of information. Following the announcement by the Financial Secretary in February last year, we have moved swiftly to amend our law to enable Hong Kong to adopt the prevailing OECD article on exchange of information. The relevant legislation has come into operation earlier this month. We hope this will become an impetus for Hong Kong to expand our treaty network. It serves as the strongest rebuttal against any negative perception to compare Hong Kong with a tax haven. It also demonstrates our staunch support for international efforts in enhancing tax transparency while at the same time providing sufficient safeguards to protect taxpayers' privacy and confidentiality of information exchanged.
So far, public attention in Hong Kong on CDTAs has been surrounding on G20's actions against tax havens and focus has somehow been distracted from the real value and benefits of such agreements to our economy and to our role as the financial and business hub of Asia. The agreement that we are about to sign today will further strengthen economic partnership between Hong Kong and the Netherlands. It provides added investment incentives for Dutch and Hong Kong companies to do business in each other's jurisdiction. Through the allocation of taxing rights and the provision of tax relief in case of double taxation, the agreement will provide certainty, ensuring that investors and employees do not have to pay twice on the same source of income. It gives our asset management, shipping, aviation and other sectors a strong advantage to compete. I am confident that the agreement will encourage greater flow of investment, technology, talents and expertise between us for the mutual benefits of both economies.
With the necessary enabling legislation in place, Hong Kong has intensified our treaty negotiations with a number of our trading partners. We hope to give you more good news in the next few months.
Minister De Jager, ladies and gentlemen, today is the start of a new chapter in the relationship between Hong Kong and the Netherlands. I look forward to many more fascinating episodes in the years to come.
Thank you.
Ends/Monday, March 22, 2010
Issued at HKT 19:01
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