Italian-HK business is more than a pretty exterior; there’s plenty under the hood. The long-awaited ratification of a DTA could make the engine purr even smoother.
Food Fashion Wine Fast cars
There. We said it. Now we can move on. Diplomats promoting trade often struggle between taking pride in the things their nation does best and having those elements, often raised to the level of stereotype, overshadowing their accomplishments
that might create more opportunity in the market they serve.
That being said, Hong Kong is not lacking in consuming the traditional elements that people’s minds go to when they think of Italy. Not only consuming, but also financing – Prada is listed on the Hong Kong stock exchange.
Consul General Dr Alessandra Schiavo faces this classic dilemma. It is too easy to speak in glowing terms of the Hong Kong’s many fine food and wine importers, restaurants, and fashionistas, like coiffeuse-entrepreneur Lorena Severi.
The Consul General is at pains to point out Italy’s role as a top exporter of medical technology, green technology and financial and legal services. Italy is consistently at the top of Hong Kong trade and export tables among fellow Europeans Germany, UK and France.
One area where relations could be advanced, and ideally before Dr Schiavo finishes her time in Hong Kong, is the final ratification of the Double Taxation Agreement between Hong Kong and Italy.
DTA: Still waiting
Currently, Hong Kong is currently designated a privileged tax regime by the Italian government. Essentially, companies with a presence in Italy and Hong Kong must complete extra layers of Italian paperwork when transacting or moving money between the two jurisdictions to ensure that the transaction relates to real business, not an effort at tax evasion.
The establishment of a Double Taxation Agreement would remove this irritant by establishing an Exchange of Information agreements acceptable to the Italian government. The Consul General recognises the cost to business. “For big companies, it’s not a problem. Small companies have more problems because they have fewer resources [to deal with paperwork]…It causes headaches, but the companies here always are able to provide the necessary documentation.”
Consistently at the top of Hong Kong trade and export tables among fellow Europeans
A recent delegation to Beijing as part of a China-Italy summit saw Hong Kong based business, with the Consul General, raise the issue. See the issue as one that can be resolved – not fatal. “I expect more Italian companies to come to Hong Kong and set up here…It would be exaggerated to think that the trade has been damaged or dampened. Because if you look at the volume of trade, it is very high.”
The DTA has been ratified by Hong Kong and signed by the previous Italian government. Recent elections have slowed the passing of legislation. With the new government in place, Dr Schiavo is hopeful for fast action.
The Minister of Foreign Affairs have “Inserted it among the priority agreements which have to be discussed by the Italian parliament.” In other words, it is on the short list of ‘first to pass’ legislation.
Hong Kong’s recent moves to enable the LegCo to establish the OECD’s latest unilateral Tax Exchange Information Agreement (TIEA) standards could, perhaps, help the situation, but this is uncertain. The ratification of the DTA by the new Italian parliament is. The Consul General and the business community are hopeful.
Given the ratification in Hong Kong and the signature in Italy, all the heavy lifting has been done between the negotiating parties. With the document on the top of the new Parliament’s priority list, all that remains is the final vote at home. We know one Consul General who will be monitoring the situation closely from Hong Kong.