New Zealand and Hong Kong Develop Cooperation

March 30, 2010 International Tax CooperationTaxation in Hong KongTaxation in New Zealand

Night Lights in Hong KongThe Governments of New Zealand and Hong Kong have signed a Closer Economic Partnership (CEP) agreement and engaged to begin negotiations for a Double Taxation Agreement (DTA) in October.

The Hong Kong Government showed its continued commitment to meeting international standards on taxation transparency and forming closer economic ties with economies worldwide by announcing on the March 29th the signing of its first CEP agreement outside of mainland China, and intentions to begin negotiations for a future DTA agreement with New Zealand. The DTA signals an additional step forward for Hong Kong, as it will implement the Organization for Economic Development and Cooperation’s (OECD) internationally recognized standard for tax information exchange, along with eliminating occurrences of double taxation on incomes earned by entities operating between the two countries.

The New Zealand Ministry of Foreign Affairs and Trade (NZMFAT) has previously stated that no New Zealand businesses have reported issues with taxation structures while operating in Hong Kong, deferring the immediate need for a DTA. But the NZMFAT also conceded that a CEP, which is expected to come into effect in late 2010 after legal ratification by the Government of both nations, would quantify the need for a bilateral DTA on account of the inevitable increase in cross-border economic activity and trade. According to Peter Dunne, New Zealand Revenue Minister, Hong Kong is currently New Zealand’s ninth largest export destination, and an invaluable source of foreign investments. Current estimates place the trade between New Zealand and Hong Kong at NZD 800 million (approx. USD 567.2 million) annually.

The New Zealand Revenue Minister commented on the recent willingness to discuss tax information exchange, saying “I welcome Hong Kong’s change of stance on information exchange matters, which has made the double tax agreement negotiations possible.”

Photo by iaindc