Boosting Hong Kong’s competitiveness in the BEPS era

Daniel Ho

    Research output: Contribution to journalJournal articlepeer-review

    47 Downloads (Pure)

    Abstract

    In the Group of Twenty (G20) leaders’ meeting in June 2012, the finance ministers of the participating nations commissioned the Organization for Economic Co-operation and Development (OECD) to conduct a study and report on Base Erosion and Profit Shifting (BEPS). In July 2013, OECD and G20 countries adopted a 15-point Action Plan to address BEPS. After a 2-year consultation period, the OECD presented the final package of anti-BEPS measures addressing all of the 15-point Action Plan in October 2015. Since then, many tax jurisdictions have introduced new initiatives to enhance tax transparency and combat cross-border tax evasion. Hong Kong is committed to cooperate with the international community to combat BEPS. On 26 October 2016, Hong Kong issued a consultation paper on proposed measures to counter BEPS. The consultation paper focuses on the OECD minimum standards as well as other actions which are in line with the priorities and broader roadmap of Hong Kong on anti-BEPS strategy. Recently, Hong Kong introduced a set of tax and non-tax measures so as to elevate its competitive position. These measures include: (1) extending the profits tax exemption for offshore funds to private equity funds on 17 July 2015, (2) enacting a concessionary tax regime for qualifying corporate treasury centers on 3 June 2016, and (3) launching the Shenzhen-Hong Kong Stock Connect on 5 December 2016. Using a legal research methodology, this study examines these new measures and evaluates their impacts on the international competitiveness of Hong Kong. Major concluding observations are as follows. The OECD final package of the 15-point Action Plan is not the end but only part of the journey in tackling BEPS. In the BEPS era, it is important that different jurisdictions cooperate with each other and introduce domestic laws and regulations to implement the OECD recommendations. The recent tax measures in Hong Kong on the offshore funds and corporate treasury centers will enhance Hong Kong’s competitiveness in attracting offshore funds to be managed in Hong Kong and uplift Hong Kong’s status as an attractive regional corporate treasury center. Also, the official launch of Shenzhen-Hong Kong Connect and the Shanghai-Hong Kong Connect will strengthen Hong Kong’s strategic role as a platform for international investors to access the Mainland China capital markets and Mainland China investors to go aboard. In sum, these measures are conducive to Hong Kong’s economic growth and enhance its overall competitiveness.

    Original languageEnglish
    Pages (from-to)17-32
    Number of pages16
    JournalInternational Tax Journal
    Volume43
    Issue number4
    Publication statusPublished - Aug 2017

    User-Defined Keywords

    • Base erosion
    • profit shifting
    • BEPS
    • competitiveness

    Fingerprint

    Dive into the research topics of 'Boosting Hong Kong’s competitiveness in the BEPS era'. Together they form a unique fingerprint.

    Cite this