Despite this, the Government of the Hong Kong Special Administrative Region (HKSARG) recognizes that there are advantages in concluding comprehensive double taxation (DBA) agreements/conventions with our trading partners. A DBA gives investors a guarantee on the tax rights of the contracting parties; Helps investors better assess their potential tax liabilities from economic activities; and provides an additional incentive for foreign companies to do business in Hong Kong, as well as for Hong Kong companies to do business abroad. That is why HKSARG`s policy was to establish a DBA network that would minimize the double taxation of Hong Kong residents and residents. Hong Kong has actively involved trading partners in the negotiation of the DBA (for different types of revenue). Because of the international nature of operations, air carriers are more vulnerable to double taxation than other tax payers. Given that DBA negotiations may take longer, Hong Kong`s policy was to include double taxation regimes for air revenues in bilateral air services agreements negotiated between Hong Kong and aviation partners. A DBA between Singapore and another jurisdiction is intended to avoid double taxation of income collected by a resident of the other jurisdiction in a jurisdiction. A DBA also highlights tax duties between Singapore and its contractor on different types of income from cross-border economic activities between the two jurisdictions. The agreements also provide for a reduction or exemption from tax on certain types of income. Look at the list of Singapore`s DBA contracts, limited contracts and EOI agreements. Another problem is marine revenues.
Hong Kong amended legislation to provide for a mutual exemption from ship revenues from 1 April 1998, to allow ship operators to benefit from tax breaks from places subject to similar mutual exemption legislation. At the same time, Hong Kong has begun negotiations on simplifying double taxation for maritime income with other places that either do not provide for mutual exemption in their legislation or even prefer reciprocal exemption provisions to prefer a bilateral agreement. Hong Kong adopts the territorial tax base, which imposes only Hong Kong income/profits and in most cases is not taxed in Hong Kong for income from a resident of an outside source in Hong Kong. As a result, Hong Kong residents are generally not subject to double taxation. Many countries that tax their people on a global basis also offer unilateral tax breaks to their residents who operate in Hong Kong for every Hong Kong tax paid on Hong Kong`s income/profits. Hong Kong allows the deduction of foreign tax paid on the basis of turnover for income that is also taxable in Hong Kong. As a result, companies operating in Hong Kong generally have no problem with double taxation of income.