HK Tax System Favourable For Luxembourg Companies Hong Kong's favourable tax system and its latest tax measures provide an added incentive for Luxembourg enterprises to do business and invest in 'Asia's world city', around 80 business and financial services leaders were told at a reception in the Grand Duchy to celebrate the start of the Lunar New Year. Speaking at the reception organised on Thursday by the HKTDC (Hong Kong Trade Development Council with the support of the Hong Kong Economic and Trade Office, the Deputy Representative for Hong Kong Economic and Trade Affairs to the European Communities, Ms Wong Yuet-wah, quoted the effective corporate taxation study by the Basel Economics Institute, which recently ranked Hong Kong as the most attractive place in the world for companies from the point of view of taxation.

EU Adopts New Rules For VAT On Services

The European Council on Thursday adopted a package of measures on value-added tax (VAT), which includes a change in the rules on the place of supply of services, in order to ensure that most types of services are taxed in the member state of consumption. At the same time, the package introduces the possibility for taxpayers who perform certain services to fulfil their EU-wide VAT reporting obligations in one single member state (using a "mini one-stop shop") and thus reduce their compliance costs. The package, which includes two draft directives and a draft regulation, also provides for improved mechanisms for cooperation between member states, in order to prevent unauthorised tax avoidance under the new system.

Hong Kong Banking Sector To Face Challenges  Hong Kong Monetary Authority Deputy Chief Executive YK Choi suggested on Tuesday that although Hong Kong's banking system is strong, it faces challenges from the intense competition and potential volatility in global financial markets as a result of the sub-prime fallout and possible economic slowdowns in the US and UK. He urged the sector to remain prudent in loan underwriting, and to ensure the use of loans is consistent with the borrowers' declared loan purposes. Speaking at a press conference earlier this week, Mr Choi observed that the banking sector remains highly liquid, well capitalised and profitable. The liquidity ratio rose from 50.7% in December 2006 to 51% in September last year. The loan-to-deposit ratio for all currencies rose from 47.9% to 48.6%.

WTO Welcomes Ukraine As A New Member  The World Trade Organization's General Council has this week paved the way for Ukraine’s membership in the WTO by approving its accession terms. Ukraine will have to ratify the deal by 4 July 2008, and will become a WTO member 30 days after the ratification.“Ukraine’s WTO membership will strengthen the multilateral trading system and provide this country with a stable and predictable trade environment that will boost its growth and prosperity. I am particularly pleased to welcome to the WTO President Victor Yushchenko, whose personal commitment to his country’s accession was a major factor in the successful outcome to these negotiations,” announced WTO Director-General Pascal Lamy.

Hong Kong And Dubai To Strengthen Economic Ties

Dr Omar Bin Sulaiman, Governor of the Dubai International Financial Centre (DIFC) on Friday welcomed Sir Donald Tsang, Chief Executive of the Hong Kong Special Administrative Region of China, along with a 24 member delegation from Hong Kong. The visit to Dubai aimed to further strengthen political and economic ties between the two financial hubs. "It is with great pleasure that we welcome our friends from Hong Kong to the DIFC," commented Nasser Al Shaali, Chief Executive Officer of the DIFC Authority.

Hong Kong-Mainland Tax Deal Signed Hong Kong and the Mainland have signed the second protocol to the Arrangement for the Avoidance of Double Taxation & Prevention of Fiscal Evasion with respect to Taxes on Income, it was announced this week.

Hong Kong Can Be An Asian Islamic Financial Centre  Hong Kong is well-placed to become a centre for Islamic finance in Asia, its Chief Executive Donald Tsang announced this week, inviting Kuwaiti banks and financial-services companies to extend and diversify their global reach through the city. Addressing the Kuwait Chamber of Commerce & Industry at a business lunch on Monday, Mr Tsang suggested that Hong Kong's sound financial services infrastructure and well-established legal system make it an attractive location for such investments.

Russian Tax Amnesty Nets USD150 Million  A ten-month long tax amnesty which began last year has yielded the Russian government about USD150 million in tax after a last minute rush of declarations, it has been reported. According to the RIA Novosti news service, which cited data from the Federal Treasury, a total of 28.19 billion rubles (USD1.15 billion) was declared during the amnesty, which closed on 31st December, 2007, with about 83% of those declarations coming in the last month of the scheme. The report stated that Moscow accounted for the largest portion of the tax payments at 2.1 billion rubles ($90 million). Surprisingly, Moscow was followed by the sparsely populated region of Chukotka, governed by the billionaire Roman Abramovich, which saw 565 million rubles ($23 million) in payments.