Hong Kong and Laos Sign Comprehensive Double Taxation Agreement to Boost Economic Ties

Hong Kong and Laos enter into tax pact

The Financial Secretary, Mr Paul Chan, had a bilateral meeting with the Deputy Prime Minister and Minister of Finance of Laos, Mr Santiphab Phomvihane, in Hong Kong today (October 29) and jointly witnessed the signing of a comprehensive avoidance of double taxation agreement (CDTA) by the Acting Secretary for Financial Services and the Treasury, Mr Joseph Chan, and Deputy Minister of Finance of Laos Mr Soulivath Souvannachoumkham on behalf of the Hong Kong Special Administrative Region (HKSAR) Government and the Government of Laos respectively.

Mr Chan said, "Laos is a member of the Association of Southeast Asian Nations (ASEAN) and a participant in the Belt and Road Initiative, with significant potential for co-operation with Hong Kong in areas such as economy, trade and investment. This CDTA helps foster economic and trade ties between the two places, further leverages Hong Kong's unique role as a 'super connector' and 'super value-adder' linking the Chinese Mainland with the international market, and creates favourable conditions for advancing regional economic integration."

At the bilateral meeting, Mr Chan highlighted to Mr Phomvihane the latest developments of Hong Kong as an international financial centre, including its advantages in areas such as capital market, green and sustainable finance, wealth management, global competitiveness and tax policy, as well as the HKSAR Government's initiatives to develop Hong Kong into a global gold trading, clearing and reserve hub. They also explored further collaboration to drive high-quality development along the Belt and Road together.

The Secretary for Financial Services and the Treasury, Mr Christopher Hui, met with Mr Phomvihane in Hong Kong and Laos in March and July this year respectively to discuss the early conclusion of the CDTA. This is Hong Kong's 61st CDTA, the sixth one signed this year, and the 16th one signed by the current-term Government, reflecting that the Government's efforts to expand the CDTA network have been consistently bearing fruit. Hong Kong has signed CDTAs with seven ASEAN member states, covering more than 70 per cent of ASEAN's total population and gross domestic product. The CDTA sets out the allocation of taxing rights between Hong Kong and Laos, which will enable investors to better assess their potential tax liabilities from cross-border economic activities and avoid double taxation, thereby promoting bilateral trade and investment.

In accordance with this CDTA, any tax paid by Hong Kong residents in Laos will be allowed as a credit against the tax payable in Hong Kong in respect of the same income, subject to the provisions of the Inland Revenue Ordinance (Cap. 112) (IRO). In addition, Laos'withholding tax rate for Hong Kong residents on dividends, currently at 10 per cent, will be reduced to a minimum of 5 per cent, while the withholding tax rate on interest, currently at 10 per cent, will also be reduced to 5 per cent.

The CDTA will come into force after completion of ratification procedures by both sides. In Hong Kong, the Chief Executive in Council will make an order under the IRO in respect of the CDTA, which will be tabled at the Legislative Council for negative vetting. Details of the CDTA are available on the Inland Revenue Department's website.

Hong Kong and Laos signed a comprehensive avoidance of double taxation agreement today (October 29). Photo shows (from left) Deputy Minister of Finance of Laos Mr Soulivath Souvannachoumkham; the Deputy Prime Minister and Minister of Finance of Laos, Mr Santiphab Phomvihane; the Financial Secretary, Mr Paul Chan; and the Acting Secretary for Financial Services and the Treasury, Mr Joseph Chan, at the signing ceremony. Source: HKSAR Government Press Releases

The Financial Secretary, Mr Paul Chan (first right), and the Deputy Prime Minister and Minister of Finance of Laos, Mr Santiphab Phomvihane (first left) witnessed today (October 29) the signing of a comprehensive avoidance of double taxation agreement by the Acting Secretary for Financial Services and the Treasury, Mr Joseph Chan (second right), and Deputy Minister of Finance of Laos Mr Soulivath Souvannachoumkham (second left) on behalf of the Hong Kong Special Administrative Region Government and the Government of Laos respectively. Photo shows Mr Joseph Chan exchanging documents with Mr Souvannachoumkham after the signing. Source: HKSAR Government Press Releases

The Financial Secretary, Mr Paul Chan (back row, right), and the Deputy Prime Minister and Minister of Finance of Laos, Mr Santiphab Phomvihane (back row, left) witnessed today (October 29) the signing of a comprehensive avoidance of double taxation agreement by the Acting Secretary for Financial Services and the Treasury, Mr Joseph Chan (front row, right), and Deputy Minister of Finance of Laos Mr Soulivath Souvannachoumkham (front row, left) on behalf of the Hong Kong Special Administrative Region Government and the Government of Laos respectively. Source: HKSAR Government Press Releases

The Financial Secretary, Mr Paul Chan (second right), had a bilateral meeting today (October 29) with the Deputy Prime Minister and Minister of Finance of Laos, Mr Santiphab Phomvihane (second left). Photo shows Mr Chan highlighting to Mr Phomvihane the latest developments of Hong Kong as an international financial centre, including its advantages in areas such as capital market, green and sustainable finance, wealth management, global competitiveness and tax policy, as well as the HKSAR Government's initiatives to develop Hong Kong into a global gold trading, clearing and reserve hub. They also explored further collaboration to drive high-quality development along the Belt and Road together. Also in attendance are the Acting Secretary for Financial Services and the Treasury, Mr Joseph Chan (first right), and Deputy Minister of Finance of Laos Mr Soulivath Souvannachoumkham (first left). Source: HKSAR Government Press Releases

Statement by ExCo Non-official Members

The following is issued on behalf of the Executive Council Secretariat:

Non-official Members of the Executive Council (ExCo Non-official Members) today (October 29) issued the following statement on the Government's follow-up work in relation to the fire at Wang Fuk Court:

The Hong Kong Special Administrative Region (HKSAR) Government today released the report of the Independent Committee in relation to the fire at Wang Fuk Court in Tai Po. The Chief Executive and Principal Officials also held a press conference to give an account of relevant matters to the public. ExCo Non-official Members expressed full support for the Government in facing up to the problems, shouldering responsibility, and pursuing comprehensive reforms.

The Convenor of ExCo Non-official Members, Mrs Regina Ip, said, "The Chief Executive and Principal Officials have clearly explained to the public the Government's follow-up work, and, on behalf of the HKSAR Government, apologised to the residents of Wang Fuk Court and the community, demonstrating sincerity and political commitment. The Chief Executive also called on his team to continue to give their utmost in their respective positions in pressing ahead with various reforms and the extensive work ahead, while drawing lessons from the incident and better exercising leadership to step up the implementation of the result-oriented governing approach. I support this position."

"The Government's plans to implement comprehensive reform on the basis of the Independent Committee's report are comprehensive and pragmatic, addressing the crux of the issues. I concur with the seven major directions of systemic reform put forward by the Government. These include combatting bid-rigging in building maintenance and renovation projects, establishing a cross-departmental task force to combat crimes related to bid-rigging in such projects, establishing a Building Maintenance Support and Services Council, reforming the operation and regulatory system for building maintenance and renovation, reforming the structure of the Buildings Department, establishing a centralised data system and reforming the complaint mechanism, and establishing a steering committee chaired by the Chief Secretary for Administration to follow up on the Independent Committee's recommendations."

As regards accountability, the Government has demonstrated its determination to pursue responsibility comprehensively and enforce accountability at various levels. On criminal liability, law enforcement authorities have successively instituted prosecutions against the companies and individuals involved in the incident. The Government has also initiated the Administrative Responsibility Two-tier Investigation Mechanism under the Heads of Department Accountability System, and is strictly following up on the administrative responsibility of the civil servants concerned. As for political accountability, the Chief Executive, having considered a wide range of factors, decided that the Secretary for Housing should take political accountability, and has accepted the Secretary's resignation.

The fire at Wang Fuk Court has exposed a number of long-standing inadequacies at different systemic levels, and the issues involved are complex and intertwined. Properly addressing these issues requires firm resolve as well as precise and decisive decision-making. ExCo Non-official Members will give their full support to the Government in taking forward comprehensive reforms and will continue to fully support its governance. ExCo Non-official Members firmly believe that, as long as society works together with dedication to turn grief into the strength to move forward, learns from the experience, and thoroughly implements systemic reforms, similar incidents can certainly be prevented, making Hong Kong a safer and better home.