Hong Kong chides EU for new tax blacklist

Hong Kong’s Government has expressed its regret that the European Union included the territory in its list of non-cooperative tax jurisdictions, saying that criticism of its transparency in tax matters is “totally unfounded.”, reports Tax News.

The EU tax blacklist was included in the European Commission’s new Corporate Tax Reform Action Plan, which was released on June 17, 2015. It features those territories that are included on 10 or more EU member state blacklists.

In a statement issued on June 18, the Government said Hong Kong has always supported international efforts to enhance tax transparency and combat tax evasion, and that it is “puzzled and very disappointed to note that the Commission has regarded Hong Kong as non-tax cooperative.”

It was added that Hong Kong was denied any opportunity to comment on or clarify its position before the proposed blacklisting, which it said was “unilateral and procedurally unfair.”

The Government noted that Hong Kong is one of the members of the Global Forum on Transparency and Exchange of Information for Tax Purposes, and that its commitment to meeting international standards on tax transparency was recognized in a two-phase peer review by that Forum, completed in 2011 and 2013.

The Government also stressed that Hong Kong accords priority to expanding its network of comprehensive double taxation agreements (CDTAs) and tax information exchange agreements (TIEAs). All CDTAs and TIEAs signed by Hong Kong have included an article on the exchange of information in line with international standards.

To date, Hong Kong has signed 32 CDTAs and seven TIEAs. 13 have been signed with EU member states, and negotiations with five other member states are under way. A couple of the members states that have featured Hong Kong on their blacklists had actually signed or are negotiating CDTAs/TIEAs with the territory.

The Government therefore strongly urged the European Commission to review with member states their lists of non-cooperative tax jurisdictions to reflect the latest developments in Hong Kong’s tax co-operation with those jurisdictions. The Government said it “seriously refuted any allegation that Hong Kong is a tax haven.”