Page 99 - Demo

The Government should include maritime-related support services in Hong Kong in a dedicated tax regime to encourage the growth of these services. While the Government has recently implemented a dedicated tax regime for the ship leasing business and drastically lowered the tax rate charged,39 other support services integral to the maritime industry such as shipbroking and ship management are excluded from the new regime. These commercial principals are drivers for high value-added services of the industry, and their presence will draw more service providers. Therefore, to facilitate the growth of a cluster in the maritime industry, it is important that the Government provides proper incentives for these commercial principals.The shipping and maritime industry is more susceptible to double taxation than other industries, as its business usually involves cross-border trade and cargo carried on one single vessel can be subject to taxes charged in each jurisdiction. A Double Tax Agreement (DTA) between two jurisdictions minimises the exposure of Hong Kong companies to double taxation and incentivises overseas companies to do business in Hong Kong.Currently, Hong Kong has comprehensive DTAs with only 45 countries and cities,40 while Singapore has negotiated DTAs with 85 jurisdictions. Furthermore, Hong Kong has yet to conclude DTAs with jurisdictions which are the major sources of cargo carried by local registered vessels, including Australia, Bangladesh, Brazil, and the Philippines. We call for the Inland Revenue Department to conclude more DTAs with major shipping jurisdictions and have closer cooperation with the industry in lobbying work. The industry has expressed frustration with the progress on DTAs and pointed out that the feedback mechanism on DTAs needs to be improved.3. Include maritime-related support services in the dedicated tax regime4. Conclude more Double Tax Agreements with major shipping jurisdictions 39 Council meeting of 27 May 2020 Proposed amendments to Inland Revenue (Amendment) (Ship Leasing Tax Concessions) Bill 2020. (2020, May). 40 Inland Revenue Department. (n.d.). Comprehensive Double Taxation Agreements concluded.97