Guernsey has signed a Double Taxation Arrangement (DTA) with Hong Kong.
It means that Guernsey has now signed 'full' DTAs with seven jurisdictions. In addition to this DTA with Hong Kong, Guernsey has had a DTA with the UK for many years and has signed DTAs with Malta, in 2012, and earlier this year with the Isle of Man, Jersey, Qatar and Singapore.
The DTA with Hong Kong was signed for Guernsey by the Chief Minister, Peter Harwood, who commented that this was a further important step in growing the business links between Guernsey and the Far East.
The Chief Minister said: "I am delighted to further strengthen our relationship with Hong Kong. The signing of this DTA, combined with the visit of the Chinese Ambassador to the UK to Guernsey this week, recognises the importance attached to Guernsey's business relationship with the Far East. The agreement is expected to bring significant commercial benefits to our finance sector, resolving issues relating to potential double taxation, and leading to greater opportunities for new business."
Guernsey's finance industry has worked closely with its counterparts in China and Hong Kong since 2006, particularly since the establishment of a Guernsey Finance office in Shanghai at the end of 2007. Guernsey signed a Tax Information Exchange Agreement (TIEA) with China in 2010.
In 2011, Guernsey businesses were approved to list on the Hong Kong Stock Exchange (HKEx) and Guernsey's then Commerce & Employment Minister was part of a delegation that visited Hong Kong. Last year Guernsey's finance industry was heavily represented in Hong Kong at conferences such as SuperReturn Asia and STEP Asia.
Today, a number of Guernsey-based firms have offices in Hong Kong, including law firms Mourant Ozannes and Ogier, fund administrator International Administration Group (IAG) and fiduciary services providers Louvre, Nerine and Newhaven.
Fiona Le Poidevin, Chief Executive of Guernsey Finance - the promotional agency for the Island's finance industry, said: "The DTA between Guernsey and Hong Kong further deepens the relationship and offers significant potential for expanding financial services business between the two jurisdictions. The DTA means that individuals or companies with 'home' as one jurisdiction but with interests in the other jurisdiction will have mechanisms in place to prevent them from being taxed by both sets of authorities on the same income. This clarity and certainty on matters of taxation makes it more attractive to conduct business between the two jurisdictions, especially in terms of investment funds, fiduciary services and intellectual property.
"In addition, the DTA will provide increased possibilities for the expansion of Guernsey's financial services business, not just with Hong Kong but also other jurisdictions. Hong Kong is continuing to develop as a major financial services hub in Asia, which is fuelled by the fact that its network of DTAs with other jurisdictions enables it to act as a gateway for business coming into and out of the wider region. As such, the DTA offers the potential to tap into the other parts of Hong Kong's DTA network and therefore attract flows from a broader field of jurisdictions."
The DTA with Hong Kong comes less than two weeks after the publication of a successful OECD Global Forum Peer Review report on Guernsey's tax regime in relation to transparency and exchange of information.
The Chief Minister added: "The conclusion of this DTA reflects Guernsey's commitment to meeting international standards of tax transparency and co-operation - underlining the fact that the OECD's Peer Review report earlier this month said that Guernsey had in place all of the elements which it assessed."
The signing of the Hong Kong DTA is Guernsey's sixth since the beginning of 2012, all of which meet the international standards on international taxation.
Rob Gray, Guernsey's Director of Income Tax, said: "As well as creating a mechanism for exchanging requested tax information with Hong Kong, the agreement will assist in resolving issues relating to potential double taxation of both corporate and personal incomes, such as business profits, dividends, interest, royalties, income from employment and pensions."
In addition, Guernsey has now signed 41 Tax Information Exchange Agreements (TIEAs), the most recent being with the British Virgin Islands (BVI), signed by the Chief Minister last week. This network of agreements covers the majority of G20 countries and EU Member States.
Guernsey has signed 18 DTAs: Full - Hong Kong, the Isle of Man, Jersey, Malta, Qatar, Singapore and the UK; Partial - Australia, Denmark, the Faroes, Finland, Greenland, Iceland, Ireland, Japan, New Zealand, Norway and Sweden.
Guernsey has signed 41 TIEAs: Argentina, Australia, Bahamas, Brazil, British Virgin Islands (BVI), Canada, Cayman Islands, Chile, China, Czech Republic, Denmark, the Faroes, Finland, France, Germany, Greece, Greenland, Iceland, India, Indonesia, Ireland, Italy, Japan, Latvia, Mauritius, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, Romania, San Marino, Seychelles, Slovenia, South Africa, St Kitts & Nevis, Sweden, Turkey, the UK and the US.
For more information about Guernsey's finance industry please visit www.guernseyfinance.com.
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