The agreements ensure that businesses and nationals of each country or territory who do business in the other do not see their income taxed by both countries.

The comprehensive agreement for avoidance of double taxation was signed in a ceremony in Ha Noi yesterday by visiting Hong Kong financial secretary John Tsang, who is leading a delegation on a five-day visit to Viet Nam to enhance their understanding of Viet Nam’s economic situation and business climate, particularly in financial services, professional services and logistics.

"The agreement represents tax savings and a higher degree of certainty on taxation rights for investors from both Viet Nam and Hong Kong when they engage in bilateral trade and investment," said Tsang. "It also fosters economic co-operation and protects both governments’ revenue bases."

Bilateral trade between Viet Nam and Hong Kong was more than US$3 billion last year. There was a 25 per cent increase in trade in the first nine months of this year, compared with the corresponding period of last year.

More than 11 per cent of trade, worth some $1.7 billion, between Viet Nam and mainland China was also routed through Hong Kong, Tsang said.

Tsang also commented about the new service provided by Hong Kong’s Dragon Airlines Ltd, operating as Dragonair, saying the service would add an extra dimension to relationship between Ha Noi and Hong Kong.

The daily flights will make Dragonair the fourth carrier to operate direct flights between Hong Kong and Viet Nam, following Cathay Pacific Airways, Hong Kong Airlines and Vietnam Airlines.

During his visit here, Tsang also met with Deputy Prime Minister Nguyen Sinh Hung, officials from the Ministry of Finance, the Ministry of Planning and Investment and members of the Viet Nam Chamber of Commerce and Industry.