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Following is the speech by the Financial Secretary, Mr John C Tsang, at the Signing Ceremony of the Comprehensive Agreement for the Avoidance of Double Taxation between Indonesia and Hong Kong in Jakarta, Indonesia today (March 23):
Dr (or Ibu) Mulyani, Distinguished Guests, Ladies and Gentlemen,
Good afternoon.
It's my great pleasure to be here today to sign the Comprehensive Agreement for the Avoidance of Double Taxation, or DTA, between Indonesia and Hong Kong.
Indonesia and Hong Kong have long enjoyed close investment and economic partnership. Our bilateral trade grew at an average annual rate of almost 9 per cent between 2005 and 2009. Last year trade between us amounted to nearly US$4.5 billion. Hong Kong is also a springboard for trade between Indonesia and the Mainland of China. Some US$2.5 billon worth of trade between Indonesia and the Mainland last year was routed through Hong Kong. That represents about 9% of total trade between our two nations.
The signing of this DTA today serves to elevate our bilateral relationship to new heights. Not only will the Agreement eliminate double taxation on the same source of income, it will also lower withholding tax rates on passive income, including dividends, interest and royalties.
It also provides greater certainty and stability in terms of tax liabilities for investors from both Indonesia and Hong Kong doing business in each other's economies.
The Agreement will encourage a greater flow of investment, technology, talents and expertise between us. It allows us to leverage on each other's strengths and strategic locations to reach out to markets in the region and beyond.
The Agreement also underlines Hong Kong's commitment to enhance the transparency of our tax regime and our support for the international effort on this front.
In February last year, I announced that we would put forward legislative amendments to enable Hong Kong to adopt the prevailing international standard on exchange of information in our DTAs. We have moved swiftly on this initiative and the relevant legislation took effect earlier this month.
The Indonesia-Hong Kong DTA will be one of the first to adopt the latest exchange of information standard. This signals a major step forward for Hong Kong, but there is no room for complacency. We will continue to expand our DTA network, enhancing Hong Kong's position as an international business and financial centre.
Last but not least, I wish to express my sincere gratitude for the hard work and dedication of everyone involved in driving this Agreement to conclusion in such an efficient manner. Also, a heartfelt "thank you" to the Indonesian Government for all the hospitality extended to my colleagues and me during this visit.
Dr (or Ibu) Mulyani, Ladies and Gentlemen, I am confident that the Agreement we have just signed will help foster an even more vibrant business environment in both places. I look forward to even closer economic ties between Indonesia and Hong Kong in the years ahead.
Thank you.
Ends/Tuesday, March 23, 2010
Issued at HKT 17:58
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