DTAs Key For Hong Kong’s Fund Sector: Report
Hong Kong needs more double tax agreements to grow its exchanged-traded funds (ETFs) market, according to a new report from the Financial Services Development Council.
Although there are currently over 100 ETFs listed in Hong Kong, the territory has been overtaken in Asia by Tokyo and Shanghai.
The report recommends that the Government promote the use of ETFs in the Mandatory Provident Fund platform, nurture local expertise and talent, and broaden Hong Kong’s ETF product range by way of ETF cross-listing.
The report also points out that “tax efficiency and the tax treatment of distribution affect the yield of investment products.” While Hong Kong currently has concluded DTAs with around 30 jurisdictions, its tax treaty network is relatively small compared with other major financial centers. The FSDC has therefore recommended that Hong Kong expedite the conclusion of DTAs with other jurisdictions.
It encouraged the Government “to develop a strategy or set clearer priorities as to the specific jurisdictions [with which] it would like to get DTAs signed in order to benefit listed ETFs in Hong Kong.” DTAs should be concluded with countries hosting significant stock exchanges, it suggested.
