Overlooking the Hong Kong skyline and Victoria Harbour

Published in Hong Kong News on 19.10.2015

Hong Kong NEWS: Hong Kong no longer on ECs list of non-cooperative jurisdictions

In June the European Union has named Hong Kong as one of the international territories and countries that are not cooperating in efforts to fight tax avoidance and included HK in its list of ‘non-cooperative’ jurisdictions for tax purposes. The EC named any jurisdiction that was, at the time of publication, blacklisted as a tax haven by at least 10 EU member states.

On 12 October the European Commission announced that it has carried out a technical update of the consolidated version of Member States' lists of third countries for tax purposes, as referenced in the Action Plan for Fair and Effective Taxation (IP/15/5188). The update reflects changes in Member States' assessments of third countries' tax good governance standards and corrections to national lists.

Before the update the following member states of the EU regarded Hong Kong as an uncooperative tax jurisdiction: Bulgaria, Croatia, Estonia, Greece, Italy, Latvia, Lithuania, Poland, Portugal and Spain. However, this was technically incorrect:

  • Spain removed Hong Kong from its blacklist in 2013, following the signing of a double tax agreement (DTA) between the two jurisdictions in 2011.
  • Estonia no longer publishes a blacklist on the EC’s website.

As consequence of this "update" Hong Kong was removed from this list.

"We will continue our dialogue with the EU and its Members States to keep them abreast of our long-standing commitments and efforts on tax co-operation. Amongst the 28 EU Member States, Hong Kong has signed 13 CDTAs and two agreements on tax information exchange with over half. Negotiations are under way with five others", a spokesperson for the Hong Kong government said.

The consolidated list is part of the EU's external agenda against corporate tax avoidance and aims to introduce more transparency into national listing processes across the EU, while also encouraging third countries to engage with Member States on tax good governance matters. The steps taken by the EU contribute to enhancing the dialogue between the jurisdictions and the Member States that list them, and encourage Member States to re-examine their national listings to ensure that they are correct and up-to-date.

The ultimate goal is to develop a common EU approach, giving Member States collective strength in addressing risks to their tax bases and provide greater legal certainty for businesses and international partners. The Commission has already started discussions with Member States to this end and intends to present a wider strategy against external risks of tax avoidance in 2016.