Speech by Second Minister for Finance & Minister, Prime Minster's Office Mr Lim Hng Kiang at the signing ceremony of the Agreement for the Avoidance of Double Taxation on Shipping and Air Transport Income between Singapore and Hong Kong,28 Nov 03

Your Excellency, Distinguished Guests, Ladies and Gentlemen.

It is my pleasure to welcome you to Singapore and to the signing of the Agreement for the Avoidance of Double Taxation between Singapore and the Hong Kong Special Administrative Region.

2 Singapore and Hong Kong enjoy good and friendly relations. Regular bilateral visits by government leaders and exchange programmes such as the Civil Service Exchange Programme have strengthened our relations over the years. We rode through the SARS crisis together, working closely and exchanging information and experiences. I am pleased that the signing of this Agreement today marks another important milestone in our close relations.

3 Our two economies have much in common. Both have leveraged on human capital to become major financial and business centres. There are substantial commercial activities between Singapore and Hong Kong. With the high volume of movement of goods and frequency of business travel between Singapore and Hong Kong, shipping and air transport are key components of our economic relations. The Agreement we are signing today for the reciprocal exemption from tax of international shipping and air transport income will free airlines and shipping enterprises in Singapore and Hong Kong from double taxation, and help to further strengthen our economic relations.

4 The Agreement also provides for the exemption of the shipping and air transport enterprises of a Contracting Party from tax in the other Contracting Party in respect of income derived from rental on a bareboat charter basis, income or profits from the sale of tickets and the provision of services, profits from the use, maintenance or rental of containers and interest on funds deposited directly in connection with the operation of ships or aircraft in international traffic.

5 Through this Agreement, our two Governments have demonstrated our commitment to facilitate greater cross-flow of trade and investment between Singapore and Hong Kong. I am confident that this Agreement will benefit both our economies. I am very pleased to join Your Excellency today in signing this Agreement.