Following is the speech by the Secretary for Financial Services and the Treasury, Mr Frederick Ma, at the Signing Ceremony of the Agreement for the Avoidance of Double Taxation between Hong Kong and Belgium today (December 10):
Minister, Ladies and Gentlemen,
It gives me great pleasure to see our friends from Belgium here today as Belgium becomes the first partner to sign a Comprehensive Agreement for the Avoidance of Double Taxation with Hong Kong.
Mention Belgium, and we are immediately reminded of its rich legacy of history, cultural diversity and artistic heritage, its intriguing and varied landscape and its fine examples of architecture through the ages. Who can forget the exquisite chocolates and superb beer for which Belgium is justly famed - and which add so much enjoyment to our lives! I hope you have all made use of the opportunity of the reception today to sample these fine products.
But chocolates and beer are only the tip of the iceberg when we look at the huge amount of trade between Belgium and Hong Kong. Belgium together with its close neighbour Luxemburg is Hong Kong's sixth largest trading partner in goods among the 15 European Member States. Bilateral trade between the two places grew at an annual average rate of 9% between 1998 and 2002, amounting to HK$22 billion in 2002. Clothing and pearls, precious and semi-precious stones are the major trade items.
And we also exchange investments. The stock of inward direct investment from Belgium to Hong Kong was HK$3.8 billion in 2001 while the outward direct investment from Hong Kong to Belgium amounted to HK$3 billion in the same year.
Today, we sign a comprehensive agreement for avoidance of double taxation between Hong Kong and Belgium. This is a very important agreement. Through the allocation of taxing rights between the two places, and the provision of tax relief in case of double taxation, the Agreement ensures that investors will not have to pay tax twice on a single source of income. In simple terms, the Agreement will bring about tax savings in respect of certain income to Belgian and Hong Kong investors doing business in each other's jurisdictions. It also formalizes the tax relief being offered by the two tax authorities at present, thus providing a further level of certainty and stability to existing and potential investors alike.
With the establishment of the Agreement, Belgians will be further encouraged to come and conduct business in Hong Kong and our businessmen to do likewise in Belgium.
The Agreement not only represents a major step forward in the bilateral relationship between Hong Kong and Belgium, but it also signifies an important milestone in Hong Kong's own programme of comprehensive double taxation agreements. We are keen to establish a network of these agreements with our major trading and investment partners, and the Agreement with Belgium is an important first step. Such a network will put us on a par with other places in the region that already have one, thereby further enhancing our competitiveness in attracting investment.
I have been asked about the significance of having our first double taxation agreement with Belgium. I think the two places have much in common. Belgium has in Antwerp a major diamond centre; Hong Kong is the Pearl of the Orient and a major centre for the export of watches and jewellery. Belgium is located at the heart of Europe, and Brussels is the headquarters of the European Commission. Hong Kong is in a similarly strategic position in Asia - a gateway to and from the Mainland and Asia's World City. Belgium has a highly developed economy with flourishing private enterprises and a diversified industrial and commercial base. We in Hong Kong have a strong commercial tradition and are well-known for our entrepreneurship. It is no coincidence that the two places find themselves natural partners in a double taxation agreement.
With the signing of the Agreement today, we open a new chapter in the relationship between Belgium and Hong Kong. And our bilateral cooperation and exchanges will grow from strength to strength.
Ends/Wednesday, December 10, 2003