Hong Kong Financial Secretary John Tsang and French Minister of Finance Christine Lagarde will sign an Avoidance of Double Taxation Agreement (DTA) Thursday (Oct 21).
At a Paris luncheon on Wednesday, Tsang said the agreement would eliminate double taxation on same source income, boost tax savings, and provide more certainty on taxation rights for investors from both Hong Kong and France.
It would also further encourage the flow of investment, talent and technology between them, according to his address at the luncheon.
The French Ministry of Finance said the agreement signature is a result of over 10 years of negotiations.
The negotiations succeeded after Hong Kong decided to conform to the relative international standards to exchange information on tax matters. Meanwhile, France can also obtain the necessary information in application to its tax legislation.
Moreover, investors in Hong Kong will benefit from a reduction of 10 percent of withholding tax rate on passive income (such as dividends, interests and royalties), the ministry said in a statement.
At present there are 700 French companies operating in Hong Kong.
Sources from the French Finance Ministry said Hong Kong represented two billion euros of trade surplus for France last year, and probably up to three billion this year.
Tsang arrived in Paris Wednesday for a two-day visit, which started with a business luncheon attended by French State Secretary for Foreign Trade Anne-Marie Idrac.
