PRZOOM - /newswire/ -
Hong Kong, Hong Kong, 2005/08/03 - New EU banking regulations expected to result in increased flow of capital to Asian offshore jurisdictions, making Hong Kong a perfect place for an offshore company incorporation.
Hong Kong looks set to be a key beneficiary of a new EU ruling which took effect at the beginning of this month.
The EU Savings Directive, which came into effect on July 1, obliges financial institutions in all EU member states to either disclose tax and bank information to the relevant tax authority, or charge clients a hefty withholding tax.
Though the new directives will specifically affect EU residents, a number of banks in ‘tax havens’ have also agreed to exchange customer information, including Jersey, Guernsey, the Isle of Man, the British Virgin Islands, the Cayman Islands, Switzerland, Liechtenstein, Monaco and San Marino.
The reputation of discretion for some of these countries is being eroded. Since July 1, in order to keep details of their wealth private, bank customers now have the option of paying a withholding tax which will be levied directly in the country in which their savings are held. This will be charged at a rate of 15 per cent for the first three years, 20 per cent for the following three years, and 35 per cent from 2011 onwards.
The result, say analysts, is a movement of money away from these countries and into secure offshore jurisdictions in Asia, such Hong Kong.
Hong Kong has long enjoyed a reputation as a secure, tax-free and highly respectable jurisdiction for international banking and company incorporation. With this latest development from Europe, Hong Kong company formation and corporate and personal banking options are becoming more popular with international businesses and high net worth individuals.
Since Hong Kong is neither a signatory to the EU directive, nor agreeing to cooperate with the Organisation of Economic Cooperation and Development (OECD), it looks set to gain even further.
Healy Consultants (healyconsultants.com) managing director Aidan Healy said: “We have witnessed a trend of capital flow from Europe and the US to Asia, as a result of the threat to client confidentiality posed by OECD pressures on tax haven countries. “Consequently, we are now seeing a significant upturn in demand for Hong Kong companies and corporate bank accounts from our clients,” he added.