Hong Kong and Chile agreed Saturday on an arrangement on the avoidance of double taxation on shipping income between the two economies, according to the local government website.

During his visit to Santiago, Chile, Financial Secretary of Hong Kong John Tsang had a meeting with the Chilean Undersecretary of Foreign Affairs Fernando Schmidt, during which a return letter was received from the Chilean side, confirming the arrangement.

Under the arrangement, ship operators resident in Hong Kong are now exempt from income tax on shipping income that is taxable in Chile. Similarly, ship operators resident in Chile are exempt from profits tax on shipping income that is taxable in Hong Kong.

At a bilateral meeting between Tsang and his Chilean counterpart Felipe Larrain, both sides agreed that it is now time for the two sides to initiate discussions on a free-trade agreement.

At Tsang's invitation, Larrain said he will start planning for a 'Chile Day' to be held in Hong Kong during which a large delegation of Chilean business people would come to explore opportunities.

Hong Kong enjoyed a reputation not only as an international banking center, but also as China's most important center for global finance, what set Hong Kong with unique "China advantages" and "global advantages", Tsang said.

He encouraged Chile's resources sector to consider the potential of a Hong Kong listing, saying that that Chilean firms listing in Hong Kong can take advantage of Hong Kong's market liquidity, attractive valuations and access to investors in the Chinese Mainland.