Hong Kong and Italy have agreed to a double tax agreement that is expected to strengthen economic ties between two countries. In an August 14, 2015 press release the Hong Kong Secretary for Financial Services and the Treasury, Professor K. C. Chan, said that Hong Kong has all along been committed to expanding its network of comprehensive agreements for the avoidance of double taxation (CDTAs) with trading and investment partners, and has signed 32 CDTAs so far, including the agreement with Italy.
The CDTA, which became effective on August 10, 2015:
- Facilitates Hong Kong’s removal from Italy’s blacklist of jurisdictions that do not share tax information, and underscores their strong commitment to tax transparency.
- Will help investors better assess their potential tax liabilities from cross-border economic activities and provide added incentives for Italian companies to do business or invest in Hong Kong. Under the agreement, tax paid in Hong Kong may credited against tax payable in Italy.
- Will greatly incentivise and improve trade relations, since, with respect to such trade, Italians will no longer be subject to Italian Tax Law No. 73/2010, which states, in pertinent part “Italian taxable persons for VAT purposes shall communicate transactions carried out with blacklisted countries to the Italian Revenue Agency. The transactions to be reported are those involving the sale and purchase of goods and services to and from blacklisted countries”.
The CDTA between Hong Kong and Italy was signed on January 14, 2013, and incorporates tax information exchange provisions based on the Organisation for Economic Cooperation and Development's latest international standard.
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