Chinese Special Economic Zone Shenzhen is considering revamping its taxation system to challenge Hong Kong in enticing multinationals to set up their regional headquarters in the Zone. A number of Hong Kong and Macau members of the Shenzhen municipal People's Political Consultative Conference put their ideas to a discussion panel with SEZ officials over the weekend, the China News Service reported yesterday.
Higher taxes are the main obstacle facing foreign companies considering moving their regional headquarters from Hong Kong or Macau to the SEZ. Enterprises with foreign investment currently account for more than 70 per cent of Shenzhen's total industrial output and more than 50 per cent of its total exports. The firms also contribute a quarter of the total taxation collected by the city each year, and they play an important role in the SEZ's economic development.
However, while many world-class multinational conglomerates had set up their headquarters in Hong Kong they were hesitant to take the next step into Shenzhen, largely because of tax. The mainland has a progressive taxation system so that executives must pay taxes of up to 40%, while in Hong Kong the rate is a maximum of 15%. If their companies offered them tax subsidies then operating costs would increase.
Advisers say the SEZ should consider giving taxation incentives to attract overseas talent, which could include giving high-income earners from overseas exemptions if they were paying off a housing mortgage. This would encourage them to invest in Shenzhen's property market. For low- to middle-income earners, the SEZ could consider tax allowances for spouses, children and aged parents, the advisers said. For high-income earners the government should work out an average, relatively lower tax rate.
The panel took place after Shenzhen Mayor Yu Youjun revealed that his department had been negotiating with the Central Government over the past five months to seek authorisation for the SEZ to play a pilot role in the new economic environment following China's accession to the World Trade Organisation.
.
Network Tweets
Network BlogsContent
provided by
|
Archive | Resources | Partners | Site Map | Links | Newsletter Archive | Contact | RSS Feeds | About | Syndication | Advertising & Marketing | Recruitment | Terms & Conditions | Privacy & Cookies
Copyright © 2012 - All Rights Reserved - Tax-News.com
IMPORTANT NOTICE: Tax-News.com has taken reasonable care in sourcing and presenting the information contained on this site, but accepts no responsibility for any financial or other loss or damage that may result from its use. In particular, users of the site are advised to take appropriate professional advice before committing themselves to involvement in offshore jurisdictions, offshore trusts or offshore investments.
Write a comment