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Hong Kong To Expand IFC Role In 2016

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

14 January 2016


In his 2016 Policy Address, Chief Executive Leung Chun-ying announced a broad range of initiatives to consolidate and expand Hong Kong's role as a major international financial center.

He said Hong Kong "still has immense potential for further development" in that role, and stated that the Government "will continue to seize the opportunities flowing from the reform and opening up of [Mainland China] to foster the diversification of the financial services industry."

He said the Government will continue "to create a favorable tax environment to consolidate Hong Kong's status as a premier asset management hub in the Asia-Pacific region." A proposal has already been put forward to introduce a new open-ended fund company structure to attract more funds to domicile in Hong Kong. In addition, the profits tax exemption for offshore funds was extended also to private equity funds last year.

Leung also plugged Hong Kong as an ideal location to set up corporate treasury centers. To further attract multinational and Mainland enterprises to establish such centers in Hong Kong, the Government has proposed interest deductions for corporate intra-group financing, under specified conditions, plus the halving of profits tax for qualifying treasury activities. For this purpose, a bill was tabled in the Legislative Council on December 4, 2015.

Leung also confirmed that Hong Kong will pursue free trade agreements (FTAs), investment promotion and protection agreements, double taxation agreements, and air services agreements with its major trading partners.

In particular, he said, Hong Kong would step up its engagement with the Association of Southeast Asian Nations (ASEAN). The FTA negotiations with ASEAN are expected to be concluded this year. While key issues in those negotiations include the reduction of tariffs and the liberalization of trade in services, the Government is also seeking to protect investments made by Hong Kong businesses in ASEAN member countries.

The Government is also to continue to explore the possibility of joining other FTAs signed, or to be signed, by Mainland China; to negotiate with Macao on the establishment of a closer economic partnership arrangement; and to continue or begin talks with Russia, Chile, the United Arab Emirates, and Mexico on investment protection agreements.

TAGS: tax | investment | business | private equity | free trade agreement (FTA) | tax incentives | financial services | investment funds | international financial centres (IFC) | tariffs | corporation tax | China | offshore | agreements | treasury management | Hong Kong | tax breaks | trade | services | Asia-Pacific

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