Hong Kong May Offer Tax Incentives For Technology R&D Investment

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

22 July 2002

Hong Kong's new Technology Minister announced on Friday that the government may consider offering tax incentives for investment in technology research and development (R&D), in order to stimulate private sector interest in the area.

Speaking last week, Henry Tang - currently the SAR's Secretary for Commerce, Industry and Technology, and former Head of the Federation of Hong Kong Industries - stated that:

'The government would not rule out the provision of incentives to promote private sector investment in R&D, be it the provision of tax incentives or in land.'

Although the SAR's 16% corporate tax rate is low by international standards, the Minister observed, it is clearly not enough of an incentive to private sector investors interested in R&D activities.

Mr Tang went on to reveal that Hong Kong's R&D investment is lagging behind major regional rivals such as Taiwan and Singapore. According to the Technology Secretary, 80% of the SAR's research and development is funded by the government, whilst in Singapore, upwards of 60% of R&D is funded by private sector investment.

He added that while Hong Kong spent just US$800 million on R&D in 2000, Singapore and Taiwan invested $1.74 billion and $6 billion respectively.

'We have to explore all possible options to proactively encourage private enterprises to invest and engage more in R&D activities,' he concluded.

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