Hong Kong: Hong Kong And Jersey Sign Double Tax Treaty

Last Updated: 14 June 2012
Article by Appleby  

In late February the Secretary for Financial Services and the Treasury of Hong Kong Special Administrative Region of the People's Republic of China ("Hong Kong"), Professor K C Chan and the Chief Minister of the Bailiwick of Jersey ("Jersey"), Senator Ian Gorst, signed a compensative Double Taxation Treaty ("DTA") between Hong Kong and Jersey. The DTA will become effective upon each of the governments of Hong Kong and Jersey ratifying the agreement.

This is the twenty-third DTA signed by Hong Kong and the third by Jersey and it is the first DTA that Hong Kong has signed with a leading international offshore financial centre. The DTA is based on the Organisation for Economic Co-operation and Development's (the "OECD") Model Agreement on exchange of information for tax relation matters. The DTA also sets out the allocation of taxation rights between Hong Kong and Jersey and tax relief available to both personal and corporate incomes in relation to activities such as profits, dividends, interest, royalties, salary and pension income.

The Hong Kong/Jersey Relationship

Jersey, through Jersey Finance (the promotional agency for Jersey's financial services industry), has had a presence in Hong Kong since 2009, however Jersey companies have been involved in transactions involving Hong Kong and the People's Republic of China ("China") for many years. Both Jersey and Hong Kong are seen as gateways to bigger markets, Jersey to London and by extension to the European Union and Hong Kong to China. Chinese companies have historically used Jersey as a gateway into the UK and Europe, for example, 25% of Chinese companies that have listed in London have done so through a Jersey vehicle. Further, nearly US$11 billion of banking deposits in Jersey derive from the Far East. More recently companies incorporated in Jersey have been given approval to list on the Stock Exchange of Hong Kong, with a view to expanding into China. We have also seen a development whereby Jersey incorporated companies, listed on other foreign exchanges, looking at moving their listing to Hong Kong, to tap into the Chinese investors.

The DTA will reinforce the commitment of Jersey's finance industry into building and maintaining a strong presence in Asia, especially in China, this treaty will only strengthen such a commitment.

The Implications

The positive commercial and political implications flowing from the DTA to both Hong Kong and Jersey should not be discounted. The OECD Model Agreement as a legal instrument to be used to establish effective exchange of information and thereby to curb harmful tax practices. Upon ratification, it is to be expected that the DTA will deal with aspects including:

  • taxes to be covered, both individual and enterprise income tax;
  • exchange of information upon request and the form of such a request;
  • providing for the possibility of tax examinations or investigations by competent authorities; and
  • providing for the possibility of declining a request, for instance, where the request is not made in conformity with the TIEA or the requesting party has not pursued all means available in its own territory to obtain the information or where the disclosure of the information would be contrary to public policy.

The entering into the DTA will provide comfort to investors, wherever geographically they may be based, to continue to invest via Jersey vehicles. Further, due to Hong Kong's role within China as its premier financial centre, the entering into the DTA is likely to reap positive economic activity for Jersey. In addition, the fact that the third DTA (along with 28 TIEA's also signed) entered into by Jersey gives credence to Jersey's best efforts to address harmful tax practices. As noted above, the DTA between Hong Kong and Jersey is the first and only DTA Hong Kong has signed with a leading international offshore financial centre. This will give a boost to Jersey's reputation as one of the premier offshore financial centres in the world.

The Opportunities & the Future

Geoff Cook, chief executive, Jersey Finance, Jersey's promotional body has said:

"That China's GDP is expected to continue to grow at around 8% reaffirms that there are clear opportunities for Jersey to grow its private wealth management business through its specialist trust and foundation structures and popular expat banking services. Jersey's flexible company structures also continue to be attractive as capital market activity in Hong Kong accelerates. In all these areas, this DTA will add significantly to the reasons for investors and institutions to have confidence in and choose Jersey as their preferred European financial centre to invest in Western markets."

Zhaoan Li, Jersey Finance's Head of Business Development Greater China, added:

"The signing of the agreement comes at a time when a number of Jersey legal and financial services firms are opening offices in Hong Kong, which is fantastic news. Demonstrating a commitment like this to doing business is absolutely vital in the Hong Kong market, so this agreement is really important not just in a technical sense but also because it underpins Jersey's commercial relationship with Hong Kong too."

Appleby has also seen a greater awareness to Jersey and the use of Jersey vehicles in Asia. As a result we have seen an increasing workflow for Jersey related matters involving Asian clients and we have the ability to assist clients on such matters from both its Jersey and Hong Kong offices. Recently the Appleby Jersey and Hong Kong offices advised the Aluminum Corporation of China ("Chinalco") in its US$1.35 billion Joint Venture with Rio Tinto covering the development and operation of the Simandou iron ore project in Guinea, a deal that won the Energy and Resources Deal of the Year at the ALB China 2011 Law Awards.

The Appleby Jersey and Hong Kong offices have also been involved in several financings involving Jersey incorporated borrowers. Going forward, further growth is expected in the use of Jersey vehicles in Asia and more importantly a diversification in the types of transactions involving Jersey, especially as the main players in the market become more familiar with Jersey.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
TMF Group
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
TMF Group
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions