Hong Kong Business Community In Favour Of Tax-Free Enterprise Zone
by Mary Swire, Tax-News.com, Hong Kong
06 November 2003

The majority of those in Hong Kong’s finance, legal and accounting industries are in favour of a special economic zone offering tax incentives to business on the border region between the SAR and mainland China, according to a survey undertaken by the Hong Kong division of accounting firm CPA Australia.

The results of the poll, which last month involved the questioning of 272 professionals, managers and executives, revealed that 77% were in favour of such a proposal, whilst 62% felt that the government should introduce further tax breaks to attract more business to the territory.

Additionally, 62% of those polled thought the overall tax burden in Hong Kong was less than mainland China, Singapore, Taiwan and Macau. Over half said that an increase in corporate tax from 16% to 17.5% would not drive business away from the city.

"This survey clearly demonstrates that while the business community believes Hong Kong still has a favourable tax system more can be done to retain business as well as attract new foreign investment," CPA Australia's Hong Kong president Sarah McGrath was quoted as observing by The Hong Kong Standard.

CPA Australia argues that the zone should give special tax incentives to encourage investment in industries in specific sectors including telecommunications, information technology, manufacturing, and research and development.

This is not the first time such an idea has been mooted, as in talks with the Chinese leadership in September, Hong Kong-based tycoon Li Ka-shing recently argued for a similar scheme to be put in place in a new zone on the banks of the Shenzhen River. However, the idea was rejected by the Hong Kong government, due to the high costs of constructing the necessary infrastructure

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