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Tax Incentives Likely to Attract Regional Headquarters

The Hong Kong government should give incentives to attract companies to establish regional headquarters in Hong Kong, a survey released Tuesday showed, a move that would put further pressure on the administration's strained finances.

The survey of more than 270 executives in fields ranging from accounting to manufacturing, and conducted by accounting body CPA Australia, showed that 71 percent supported the idea of giving preferential tax treatment for overseas firms looking to establish headquarters in the territory.

The government expects its budget deficit to reach a record HK$78 billion (US$10 billion) in the fiscal year to end-March 2004, or about 6 percent of GDP.

The administration is trying to increase its revenue sources and broaden its tax base, but is facing intense public pressure to keep its fiscal policies loose.

The survey showed support for providing tax incentives to companies in environmental services, information technology and telecommunications, manufacturing, trade and logistics, tourism, healthcare and human resources training.

There was less support for preferential treatment of financial services providers and property firms, the survey showed.

The survey showed 65 percent of respondents saying the introduction of a sales tax would have a negative impact on foreign investment, with 68 percent saying such a tax should be implemented either five years from now, or never.

Financial Secretary Henry Tang said late last month that a sales tax would not be introduced until the economy was on a firmer footing.

(Xinhua News Agency November 5, 2003)

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