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Guernsey And Hong Kong Sign Landmark Tax Pact

25 April 2013   (0 Comments)
Posted by: Author: Jason Gorringe
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Source: Jason Gorringe (, London)

Key funds domiciles, Guernsey and Hong Kong, have signed a comprehensive Double Taxation Agreement (DTA), to further enhance business and investment ties.

The agreement, which includes provisions for the exchange of tax information on request, brings the total number of DTAs Guernsey has signed to seven, adding to the DTA signed with Malta in 2012, and agreements signed with the Isle of Man, Jersey, Qatar and Singapore this year.

The Hong Kong DTA was signed by Guernsey Chief Minister, Peter Harwood, who commented that this was a further important step in growing the business links between Guernsey and the Far East. Harwood 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 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."

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."

The DTA in particular caps the withholding tax rate on royalties to 4%, providing the receipient is the beneficial owner of the asset from which the royalty income is derived.


Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.


The Act requires that a minimum academic and practical requirments be set to register with a controlling body. Click here for the minimum requirements of SAIT.

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