France, Hong Kong to sign long-awaited tax accord: source
France and Hong Kong on Thursday are to sign a bilateral tax agreement following 10 years of negotiations that ended when Hong Kong agreed to international standards on the exchange of tax-related data, a French finance ministry source said.
"The signature of this accord is big news for us and a good sign for the French economy," the source said.
"Hong Kong is certainly a small territory but it represented a two-billion euro (2.8-billion US dollar) trade surplus for France last year and will likely represent three billion this year," he added.
The finance ministry said in a statement that negotiations "were able to be completed after Hong Kong decided to conform to international standards relative to the exchange of tax information."
"Investors in Hong Kong will have a 10 percent reduction in tax rates retained at source on dividends, interest and royalties," the ministry said, adding that the accord also called for the elimination of double taxation.
The agreement, which sources said would be signed by French Finance Minister Christine Lagarde and Hong Kong counterpart John Tsang, now needs parliamentary ratification.
The ministry described Hong Kong as an "open door to China" and has a "considerable" French population of 12,000.
"The three largest Hong Kong hotel chains are to open hotels in Paris in the next two years, creating 1,500 jobs," according to the ministry.
It said negotiations had foundered until 2009 on the exchange of data on tax fraud. The obstacle was overcome in talks last year in the Group of 20 developed and developing nations, with Hong Kong adhering to a convention model drafted by the Organisation for Economic Cooperation and Development that is considered to be particularly strict, the ministry statement said.
© 2010 AFP