Exclusive | Hong Kong could lose Australian talent to Singapore if Canberra imposes tax pressure on expatriates, chamber chief warns

“We combine capabilities that no other regional center can match,” she said.

Consultation on double taxation agreements is one of the proposals that Parliament is proposing that Treasurer Paul Chan Mopo consider in his budget speech next month. The City of Canberra is also considering changes to its own tax residency framework that could affect many Australian expatriates living in Hong Kong.

Such bilateral agreements prevent expatriates from being taxed once by their home country and then again by the host country. Singapore, the United States and mainland China have double taxation agreements with Australia, but Hong Kong does not. However, the city has such agreements with more than 40 other countries.

In a proposal seen by the Post, the Chamber of Commerce said the agreement would provide “a significant incentive for Australian businesses to look to Hong Kong as a hub”.

Canberra’s proposed tax reforms, if passed, will affect some Australian expatriates. Currently, anyone who resides in Australia for more than 183 days must pay tax in Australia on their income. The country wants to reduce the number of days to 45 days for people who have residency rights or family members, residential property or other economic interests in the country.

The newspaper has learned that Australia’s Treasury Department is considering proposals received during the proposal’s consultation period, which ended in September last year.

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Mr Orgill, a partner at alternative investment governance platform HFL Advisors and who has lived in Hong Kong for 25 years, said the majority of Australians living in Hong Kong could end up paying income tax in both locations.

“All else being equal, if you can be in Hong Kong or Singapore, that’s a reason to be in Singapore,” she said.

She argued that if tax residency changes were adopted, it would be difficult for employers to attract Australians to Hong Kong.

“It could undermine Australia’s ever more important presence in Hong Kong as a position of understanding and influence, and it won’t help Hong Kong in attracting talent,” she said.

According to Australian government statistics, approximately 100,000 of Australia’s citizens live in Hong Kong, making it one of the city’s largest expatriate communities.

Hong Kong used to attract hundreds of new Australian expatriates each year under the city’s various talent development schemes. Hong Kong’s latest immigration figures show around 1,200 Australians entered Hong Kong through such programs last year, compared to more than 1,900 in 2018.

The number of Australian companies based in Hong Kong also fell. According to official figures, there were 160 people last year, down from 185 in 2019 before the pandemic, a decrease of 13.5%.

But Mr Orgill insisted Hong Kong remained important to Australian businesses. He said the importance of the rule of law and an independent judiciary is “clearly important to Hong Kong’s reputation as an international financial center and as a place to do business.”

Orgill said changes in Hong Kong since the enactment of the national security law and the pandemic have created “different perceptions” of Hong Kong, and the city’s “one country, two systems” governing principle needs to be better communicated. he added.

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In a bid to attract more Australian talent, the Chamber is calling on the city government to expand its current workforce development scheme, which Mr Orgill said would include not only the construction sector but also food and beverage staff. is suggesting. He said apprenticeships could also be expanded, particularly in the catering sector, to alleviate worker shortages.

Shane Osborne, a Michelin-starred Australian chef who runs three restaurants in Hong Kong, said his industry was particularly in need of chefs and waiters.

“Training is great, but it requires significant investment from the government to get it right,” he said.

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The chamber also said it would benefit people working in the construction, design and infrastructure development industries that skills gained in other jurisdictions would be better valued.

Brian Shuptlin, an Australian and managing director for Asia at Turner & Townsend, a global consulting firm specializing in the construction and infrastructure sector, says Australian companies are working on big projects in Hong Kong, including the northern metropolis. He said he was keen to acquire a portion.

The massive project near the mainland border in the northern New Territories is envisioned as a global innovation and technology hub with 900,000 apartments housing 2.5 million people.

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Mr Shuptolin, who moved to Hong Kong from Singapore in 2021, said wider recognition of the qualifications could help address the construction sector’s labor shortage, as companies need more project managers, construction managers and quantity surveyors. He said he was deaf.

He said Australian universities offered many strong programs in these areas.

However, as Canberra’s proposed change of tax residence would affect many Australians in Hong Kong, it felt that a double taxation agreement between Hong Kong and Australia was a priority.

His children are still young and he does not return to Australia often, so the proposed reduction in residency restrictions will not have an immediate impact. But once his kids go to college there, he might start going back more often. That means you may end up being taxed in both places above the limit.

“That would be a big consideration for me,” he said.