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Doing business in Hong Kong
Hong Kong is a very vibrant cosmopolitan city in Asia. It has rich merchant and trading traditions and the speed and ways of doing business are different to many other parts of the world. Your word is your seal, or so they say. Many business deals have been done on a handshake. Yet, it makes perfect sense to attend to legal, taxation and commercial and contractual matters. PolCham can point you in the right direction so that you meet the right business advisors.
Below is a "Must Read" summary about developments on the Avoidance of Double Taxation Treaty between Poland and Hong Kong.
PolCham was invited to attend a seminar on tax transparency and current international trends and what Hong Kong is doing about it. Essentially, the automatic and comprehensive tax information exchange across jurisdictions agenda is politically driven after 2008 financial crisis and a number of tax evasion scandals over the past years.
G20 countries have asked OECD to come up with comprehensive common tax reporting standards, and the progress is very rapid. This explains why Hong Kong moved from 4 Double Tax Treaties only 6-7 years ago to approx. 30 now, and many under negotiations.
This will be a multilateral global convention, and will be largely aligned with FATCA (similar type of legislation from the USA) to avoid double reporting costs by the banks. The tax jurisdictions which made the commitment to adopt this convention, among others, include such bastions of privacy as Switzerland, Singapore, Isle of Man, BVI and many others. There are already 66 signatory countries and additional 15 tax jurisdictions. The committed timeline is for 2017 first exchange of tax information. The collection of tax information will include full name, address, tax residence and tax number. The legislation is tax residency driven as opposed to FATCA being citizenship driven. Most importantly, while FATCA has certain thresholds in place, the new convention will not have any thresholds.
What does this mean in the Polish context in Hong Kong?
Poland is already a signatory to the automatic tax exchange convention. However, there is no Double Tax Treaty, and the negotiations have not even started. The main reason why is that while Hong Kong wants to sign a DTA with Poland, Poland made a condition to simultaneously sign Tax Information Exchange Agreement (TIEA). Hong Kong up until mid-2013 did not have a legal framework in place to be able to legally sign such agreements. However, amendments to the Inland Revenue Ordinance were made in July 2013, and the first such agreement was signed with the USA in March 2014.
It is therefore very likely that in the next few years Poland and Hong Kong will have a DTA and TIEA in place.
Watch this space!