1. 1
HONG KONG IS ALWAYS AN IDEAL
PLACE FOR INVESTMENT DESPITE THE
UNFOUNDED EUROPEAN COMMISSION
TAX HAVEN BLACKLIST
July 2015
Foreword
Hong Kong was named among the thirty uncooperative tax jurisdictions in the
European Commission’s (“EC”) tax haven blacklist released on June 17, 2015.
The tax jurisdictions on the aforesaid list had been flagged up by ten or more
European Union member states. Six of the thirty countries blacklisted are
former British territories. Countries notable by their absences include Jersey,
Luxembourg and Switzerland, whose secretive tax system are well-known to
the world. Hong Kong government said that the EC decision to blacklist them
as a tax haven as totally unfounded and groundless. Hong Kong government
also stressed that they have signed agreements with three EU member states to
avoid double taxation so far, two of which have come into force, and thus it is
unfair to Hong Kong that the EC did not take these agreements into account
when making the list.

2. 2
The EC Tax Haven Blacklist
The full list consists of thirty non-EU member states as shown in the table
below.
Andorra Cook Islands Montserrat
Anguilla Grenada Nauru
Antigua and Barbuda Guernsey Niue
Bahamas Hong Kong Panama
Barbados Liberia Seychelles
Belize Liechtenstein St Kitts and Nevis
Bermuda Maldives St Vincent and the Grenadines
British Virgin Islands Marshall Islands Turks and Caicos
Brunei Mauritius US Virgin Islands
Cayman Islands Monaco Vanuatu
The EU Member States which blacklisted HK
The ten EU member states which blacklisted Hong Kong as tax haven are
shown in the table below.
EU Member States
Any Comprehensive Double Tax
Agreement (“CDTA”) signed with HK?
Bulgaria
Croatia
Estonia
Greece
Italy
Latvia
Lithuania
Poland
Portugal
Spain
No
No
No
No
Yes (signed but not yet effective)
No
No
No
Yes (signed and effective)
Yes (signed and effective)

3. 3
Why there is such a list?
A number of EU member states assess how countries and territories around
the world apply standards of tax good governance. The criteria used by the
relevant EU countries in their assessment are essentially (i) compliance with
tax transparency and exchange of information standards; and (ii) absence of
harmful tax measures and adopt fair tax competition.
The Different Views of EC, OECD and HK
Government
As shown in the table above, the list comprises of thirty territories, with Hong
Kong and Brunei labelled as tax havens in Asia. The EC explained to the
media that the blacklist can be able to give pressure to the uncooperative
jurisdictions to adopt international standards on tax transparency. On the
other hand, the Organisation for Economic Cooperation and Development
(“OECD”) has expressed to the public its concern over the list and pointed out
that most of the territories on the list are cooperative tax jurisdictions instead.
In Hong Kong, the government regrettably stated that the EC might have ignore
the updates that Hong Kong has signed three double tax agreements with three
out of ten states (i.e. Italy, Portugal and Spain) that have accused Hong Kong,
and two agreements (i.e. HK-Portugal CDTA and HK-Spain CDTA) have already
been effective. The Hong Kong government also emphasised that the Global
Forum on Transparency and Exchange of Information for Tax Purposes has
already recognized Hong Kong's efforts in its two-phase peer review in 2011
and 2013. As a consequence, the Hong Kong government believed that some
parties in the EC might have made the mistake of thinking that Hong Kong is a
tax haven due to its simple tax system and they will work hard to change that
subjective perception.
Our View
Hong Kong is well-known to be supportive of international efforts to enhance
tax transparency and combat tax evasion for many years. OECD as well as
some of the big EU member states which have signed CDTA with Hong Kong
including Belgium, France, Ireland, Netherlands and the UK also recognised
the contribution of Hong Kong in these respect. To date, Hong Kong has
already signed thirty two CDTAs and seven Tax Information Exchange
Agreements (“TIEA”). Amongst the twenty eight EU member states, Hong Kong
has already signed thirteen CDTAs and two TIEAs. As an international
financial centre and a responsible member of the international community,
Hong Kong is proactively committed to enhancing tax transparency and
combating cross-border tax evasion. To this end, the allegation that Hong Kong

4. 4
is an uncooperative tax jurisdiction or a tax haven is doubtful and groundless.
Conversely, it is strongly believed that Hong Kong is always an ideal place for
foreign investment given her well-established legal system, simple tax regime as
well as no foreign exchange control, etc.
Conclusion
It is suggested that the Hong Kong government should continue dialogue with
the EU and its member states so that they are kept abreast of Hong Kong’s
commitments and efforts on tax cooperation, taking into account the fact that
negotiations on CDTA and TIEA with five other EU member states are also
under way. In such a case, Hong Kong shall be able to get rid of her name
from the list, thereby maintaining her competitive edge and achieving
sustainable development as an excellent platform for worldwide investors.
CONTACT US
Masson de Morfontaine is an international legal and tax firm based in Hong
Kong specializes in providing comprehensive professional services for
worldwide clients. We are experts particularly keen on helping our Chinese
HNWI clients with practical legal and tax advices, immigration visa guidance
and applications, in order to make successful cross-border investments in
various kinds of property and project in Europe as well as other countries
around the world. We are more than welcome to discuss with you about our
services. Please call or email us should you require more information.
Catherine LE BOURGEOIS Wilson YEUNG
Partner International Tax Director
+852.3593.4880 +852.3593.4804
catherinelebourgeois@masson-de-morfontaine.com wilson@masson-de-morfontaine.com
Disclaimer: This article is issued for information purpose only and it should not be
viewed as a professional advice. Accordingly, you should not act solely on the basis of
the material contained in this article. We recommend that formal advice be sought
before acting in any of the areas.
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