Guernsey has signed a double taxation agreement with Hong Kong, in line with the former’s commitment to meeting international standards of tax transparency and co-operation, and strengthening its relationship with the Far East.

This is the seventh “full” DTA that Guernsey has signed, and the move was welcomed by the island’s chief minister Peter Harwood and Guernsey Finance, the organisation that promotes the island’s finance industry.

“The signing of this DTA recognises the importance attached to Guernsey’s business relationship with the Far East. The agreement is expected to bring significant commercial benefits to our finance sector, resolving issues relating to potential double taxation, and leading to greater opportunities for new business,” said Harwood.

Meanwhile the development has also been praised by Hong Kong’s offshore law firms.

Offshore law firm, Mourant Ozannes’ Hong Kong managing partner, Paul Christopher told WealthBriefingAsia: "This is extremely good news for individuals, companies and businesses who pay tax in Hong Kong and may pay tax in Guernsey (and vice versa). The DTA provides commercial certainty and clarity on important areas of taxation.” 

Guernsey’s finance industry has worked closely with its counterparts in China and Hong Kong, particularly since the opening of a Guernsey Finance office in Shanghai in 2007 and the signing of a tax information exchange agreement with China in 2010.

“Not only does it create opportunities for business, we see it as enhancing the reasons for using Guernsey for wealth planning, investment funds and listings in Hong Kong as this is potentially a differentiator from other jurisdictions," Christopher added.

In addition to Hong Kong and Guernsey, Mourant Ozannes has offices in Jersey, London, Cayman Islands, and British Virgin Islands.

Fiona Le Poidevin, chief executive of Guernsey Finance, said: “The DTA means that individuals or companies with ‘home’ as one jurisdiction but with interests in the other jurisdiction will have mechanisms in place to prevent them from being taxed by both sets of authorities on the same income. This clarity and certainty on matters of taxation makes it more attractive to conduct business between the two jurisdictions, especially in terms of investment funds, fiduciary services and intellectual property.”

The agreement was signed remotely by both sides and completed on 22 April 2013.

Among the other “full” DTAs signed by Guernsey are those with Jersey, Malta, Qatar, Singapore, the UK and the Isle of Man. The jurisdiction has also signed 11 “partial” DTAs.