Hong Kong’s Treaty Network: Are the US, Germany and Australia Sensibly Standing Aloof? Or Sadly Missing Out?
29 Pages Posted: 21 May 2014
Date Written: May 19, 2014
The campaign currently being waged by the OECD and its member states against BEPS (Base Erosion and Profit Shifting) is important enough that this issue of this Review is devoted to examining it. Yet over the same period as BEPS has emerged as a matter of worldwide concern, the governments of 17 of the 34 OECD countries (and many other governments also) have entered into Double Tax Agreements (DTAs) with Hong Kong. This seems odd, in that Hong Kong can be used as a tax haven. Thus, whilst the OECD has been expressing concern about BEPS, half of its members have been undermining their own tax bases. Moreover, Hong Kong’s DTAs seem to reward treaty shopping even more generously than most other DTAs. In particular, they seem to facilitate the erosion not only of the tax bases of the countries that have entered into them, but also the tax bases of countries that have not entered into them. This article examines Hong Kong’s DTAs. It seeks to explain their effects, to explain also why so many countries have entered into them (notwithstanding their professed concern about BEPS), and to explain whether they are a good idea.
Keywords: Hong Kong, tax, double tax treaties, tax avaoidance, tax planning, treaty shopping, double non-taxation, US, Germany, Australia
Suggested Citation: Suggested Citation