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NEWS UPDATES 21 March 2010

Brunei signs double taxation pact with Hong Kong

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Brunei and Hong Kong signed an agreement Friday to avoid double taxation and to allow the two governments to monitor and track down potential tax evaders, reported the Brunei Times.

The deal moves the Sultanate a step closer to being stricken off the Organisation for Economic Cooperation and Development's (OECD) watchlist of tax havens.

Brunei's Second Minister of Finance, Pehin Orang Rahman Ibrahim, signed on behalf of the government, while John Tsang, the Hong Kong Financial Secretary, signed for the Hong Kong government.

The tax deal will come into force after the completion of ratification procedures on both sides.

In September, wire reports said Brunei was among countries hailed by the OECD for making big strides in the fight against tax evasion after agreeing to share banking information made possible through tax treaties. However, Brunei still remains on OECD's "grey list" as one of the states that has committed to the internationally agreed tax standard, but has yet to substantially implement it.

An officer from the Ministry of Finance earlier said Brunei is awaiting consideration for the OECD "white list" after steady progress in ratifying required international tax agreements. While Brunei is still on the "grey list", "our objective has always been to move forward into the white list", the ministry officer said in December.

In a statement, Hong Kong said the deal with Brunei would be the sixth comprehensive agreement for the avoidance of double taxation it has concluded. It said the deal will eliminate double taxation instances which would be encountered by Hong Kong and Bruneian investors. "It will bring about tax savings and certainty in tax liabilities in connection with cross-border economic activities," it added.

It said the deal will also help to foster closer economic and trade links between Brunei and Hong Kong and provide added incentives for Bruneian enterprises to do business, or to invest in Hong Kong and vice versa. Hong Kong said the deal marks a new page in supporting the international effort in enhancing tax transparency.

The deal is among the first batch of double taxation avoidance deals Hong Kong had signed using the latest OECD standard on exchange of information.

Tax deals with the Netherlands and Indonesia, both adopting this new standard, will be signed on March 22 and 23.


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