CDTA Can Boost Hong Kong-Malaysia Trade, Says Official
KUALA LUMPUR, April 25 (Bernama) — The comprehensive double taxation agreement (CDTA) signed between Malaysia and Hong Kong is expected to further boost bilateral trade and investments between the two countries.
Speaking to reporters on the sidelines of the Malaysia and Hong Kong CDTA seminar here Friday, Director of Hong Kong and Trade Office (ASEAN) Fong Ngai said in 2012 investments had already surged in anticipation of opportunities when Hong Kong and Malaysia were talking about the CDTA.
“In 2012, Hong Kong’s investment in Asean reached US$3.6 billion of which 30 per cent or US$1.1 billion went to Malaysia, even though the CDTA was not yet implemented,” said Fong.
He said with the tax treaty, bilateral trade between both countries would grow further as it provides certainty of tax treatment and transparency as well as enhance cooperation and reduce the tax burden.
A double taxation agreement (DTA) is an agreement between two countries seeking to avoid double taxation by defining the taxing rights of each country with regards to cross-border flows of income and providing for tax credits or exemptions to eliminate double taxation.
The Malaysia and Hong Kong CDTA was signed on April 25, 2012 and entered into force on Dec 28 the same year for year of assessment 2013/2014.
Fong added there are about 70 Hong Kong companies in Malaysia, and expressed hope more multinational companies and small and medium enterprises from Malaysia would invest in Hong Kong.
Investors from Malaysia could ride on the CDTA and use Hong Kong as a platform to venture into the China market, he said.
Fong also said that Hong Kong has a huge market and opportunities for businesses like retail, food and beverages plus other services like distributive trade, integrated logistics and financial services.
“Although Hong Kong only has about seven million people, it had 54 million visitors last year and it is also close to the 56 million-strong market of Guangdong province,” he said.
On the Goods and Services Tax (GST) to be implemented in Malaysia in April next year, Fong said it could be an advantage to Hong Kong companies as there will be no compounding effect of the tax as it will replace the current sales and services tax.
He said Hong Kong has not adopted the GST but maintains a narrow tax base as well as a low tax regime.
“We have the lowest taxes in the region, and we are not under pressure to increase them as the country has a budget surplus,” he added.