Hong Kong continues to be seen as a favourable business environment where businesses are in favour of tax measures to ease the economic pressures before the upcoming 2013-14 government budget announcement, according to the latest Grant Thornton International Business Report (IBR).
The research reveals that almost twothirds of Hong Kong businesses would not consider moving their headquarters abroad for a lower corporate tax rate.
Favourable business hub
“The IBR reveals that 64% of businesses in Hong Kong would not consider moving their headquarters no matter how much lower the corporate tax rate is in another country, reflecting a strong sign that Hong Kong is still regarded as one of the best location for businesses,” says William Chan, tax partner at Grant Thornton Hong Kong.
Chan notes that Hong Kong is renowned for being a global business city with its multi-cultural environment and its vital role in accessing one of the world’s biggest and most complicated markets - China.
"As a place with one of the best legal structures and business-friendly tax environments around the globe, Hong Kong is still able to attract and retain businesses, and more importantly, talented people,” adds Chan.
Expectation for more tax measures
The IBR also suggests that business in many economies would favour a lower corporate tax rate even if it means some of their tax deductions would be eliminated.
In Hong Kong, however, up to half of the businesses express preference in tax measures over lower tax rate, compared to just 22% globally. This actually echoes the IBR results that the tax rate in Hong Kong is not a determining factor in locating the businesses in Hong Kong.
The key is, in fact, Hong Kong’s uniqueness in the market place and its accessibility to the China market.
Local businesses would evidently like to see some adjustments on government tax policy instead of tax rate in the 2013-14 budget.
“Since corporate tax in Hong Kong is already at a very low level, businesses are certainly looking to the government to do more with other tax measures, such as waivers on the limit in charitable donations, separate tax rate or bands for SMEs or any other tax rebates that would help businesses reduce cost,” comments Chan.
“Hong Kong businesses are clearly looking for more supports from the government in the upcoming announcement of the 2013-14 budget next month.”