HK Investment Promotion Chief Seeks To Reassure Over GST Impact

by Mary Swire, Tax-News.com, Hong Kong

10 October 2006

Responding recently to fears regarding the potential impact on Hong Kong's competitiveness of the possible introduction of a goods and services tax, the Director-General of Investment Promotion, Mike Rowse, observed that:

"As regards the consultation on the possibility of introducing a goods and services tax, it is worth pointing out that the cities and economies with whom we are most usually seen to be in competition all have a goods and services tax already."

"For example, at the regional headquarters, regional office level, we would be normally compared with Singapore, and sometimes to some extent with Sydney. And both cities have a GST already. For offices covering China, we compete with perhaps Beijing and Shanghai and of course, the Mainland already has a tax on goods. I think this has to be seen in that sort of perspective."

He concluded:

"Given Hong Kong's many advantages favoured by foreign investors and our Government's commitment to continuously improve the business environment here, we think Hong Kong's overall competitiveness will remain strong."

The proposed GST has caused controversy in Hong Kong, and in August, thousands of demonstrators took to the streets of Hong Kong to protest against the planned tax.

The pro-business Liberal Party, which organised the march, claimed that as many as 10,000 people, including local businesses operators, traders and retailers took part, although a spokesperson from the police department stated that the number was closer to 3,000.

Miriam Lau, deputy chairwoman of the Liberal Party argued at the time that:

"This march indicates that a GST would seriously impact trades and businesses and they are very anxious to tell the government that they do not wish it to implement it."

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