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Kong. Only earnings and profits which arise in Hong Kong are taxed. The maxi- mum rate of tax on salaries is 15 per cent-paid by only 140,000 people. Divi- dends are not taxed and there is no capi- tal gains tax. Estate duties are low and easily avoided. From April 1966 to April 1975 the standard rate of taxation on cor- porate profits was also a mere 15 per cent. Since then it has been raised to 16 per cent. These tax levels are amongst the lowest in Asia, and are made even more attractive by the courts in Hong Kong ruling that when operations which give rise to profits are carried on outside Hong Kong they are not subject to Hong Kong taxes, even if those operations are con- trolled from Hong Kong and have not been taxed in any other country. The Economist (19 July 1975) believes it
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quite possible that the administration loses HK$100 million a year because ship- ping charters are deliberately located out- side Hong Kong." The journal claims that if the 1973-4 profits of one Hong Kong owned shipping company had been liable to Hong Kong tax the administra- tion would have collected about HK$17 million, enough to increase its spending on education by 10 per cent. The banks, too, by locating their operations outside Hong Kong, have reduced their local tax burden from 15 to 8 per cent. Moreover, there are no exchange control restrictions on the movement of funds out of the Colony.
In 1974 the Hongkong and Shanghai Bank turned in "disclosed" profits of more than £25 million, an increase of 16 per cent over the previous year's 23 per cent rise. Shareholders received a 28 per cent increase in their (untaxed) dividends. The performance of Jardine Matheson and Co over the past five years is also impressive. In 1970 the company had 3,000 shareholders today there
there are 30,000. Profits have grown 566 per cent from HK$38 million to HK$215 million. Gross assets are up from HK$285 million to HK$2,671 million and the dividend per share has increased 420 per cent (The Times, 18 August 1975). All this, of course, in the period when the stock ex- change boomed and bust, when real wages remained static even according to
official Government figures, when short time working has been endemic, and esti- mates of unemployment in the Colony range from 8 to 15 per cent. Meanwhile, the Investors Chronicle (10 October 1975) explains that Jardines is acquiring 53 per cent of Rennies Consolidated Holdings, one of South Africa's leading holding companies. This acquisition “should give a good boost to Jardines 1976 earnings.'
Another way in which life is good for the entrepreneur in Hong Kong is the per- missive nature of company law. Even after recent revisions to the law, which came into force in October 1975, private companies have largely a free hand in how they present their accounts. As for public companies, they are not required to give a breakdown of their sales and profits by product or by country; they need not disclose the source of their earn- ings or how many people they employ; and if they earn money outside Hong Kong they do not have to show how their total tax bill is worked out. Over the years the corruption and profiteering on the stockmarket have rivalled anything discovered in the Royal Hong Kong police (see, for example, Far Eastern Eco- nomic Review, 21 February 1975 and 18 April 1975). It was through the Hong Kong stock market that Slater Walker was able to carry out the deals that have led to police investigations in Singapore and Hong Kong. In 1972 when Mr Jim Slater visited the Far East he described Hong Kong as my kind of town (Financial Times, 27 October 1975).
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