XN000022-1990-05-09 — Page 35

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WEDNESDAY, MAY 9, 1990

"THIS LED, IN 1983, TO INTEREST TAX ON HONG KONG DOLLAR DEPOSITS WITH

BANKS LICENSED

AND DEPOSIT-TAKING

BRING COMPANIES

WEAKENED THE ABOLISHED AS WELL, BECAUSE THE DIFFERENT TREATMENT HAD HONG KONG DOLLAR, HE EXPLAINED.

11

MORE

MARKET

FROM TO

"NOW THE

RATHER FOCUS OF THE DEBATE HAS SHIFTED TO THE NARROW AREA OF THE TAXATION OF INTEREST INCOME FROM CAPITAL INSTRUMENTS. SPECIFICALLY, THE QUESTION IS, WHY INTEREST INCOME HONG

BE SUBJECT KONG DOLLAR CAPITAL MARKET INSTRUMENTS SHOULD PROCIT3 TAX WHILE THAT FROM FOREIGN CURRENCY CAPITAL MARKET INSTRUMENTS, SOURCED AS THEY ARE OUTSIDE HONG KONG, IS NOT," HE SAID.

"THIS THEN IS THE BACKGROUND TO ONE TAXATION MATTER UPON IMMEDIATE ACTION, ACTION THIS DAY, IS NOW DEMANDED," HE ADDED.

WHICH

THE FINANCIAL SECRETARY

BEEN THE TOLD MEMBERS THAT IT HAD SUBJECT OF DETAILED DISCUSSIONS BETWEEN THE

MARKETS CAPITAL ASSOCIATION AND THE ADMINISTRATION AND HE HAD PERSONALLY KEPT IN TOUCH WIT. THE DISCUSSIONS.

LEAD OUR TAX

"I AM QUITE PREPARED TO CONSIDER PROPOSALS WHICH WILL NOT. TO ANY FURTHER DEPARTURE FROM THE UNDERLYING PRINCIPLES OF SYSTEM OR ANY UNACCEPTABLE EROSION TO ITS PRODUCTIVITY.

THI

"WE ISSUE.

WORK ON IN THOSE

CHANGING

THINK,"

SIR

RECOGNISE THE PROBLEM AND WILL CONTINUE WITH OUR

THERE WILL BE FURTHER CONSULTATION WITH FINANCIAL MARKETS. BUT AS I HAVE ATTEMPTED TO DEMONSTRATE, THE TAXATION OF INTEREST IS NOT AS EASY AS SOME WOULD

PIERS SAID.

CONS

CONSIDERABLE TECHNOLOGY TRANSFER POTENTIAL

MANUFACTURERS WITH OVERSEAS INTERESTS ACCOUNT FOR NEARLY A QUARTER OF HONG KONG'S TOTAL DOMESTIC MANUFACTURED EXPORTS AND THEIR TECHNOLOGY TRANSFER POTENTIAL HAS PROVED TO BE CONSIDERABLE, THE FINANCIAL SECRETARY, THE HON SIR PIERS JACOBS, SAID IN THE LEGISLATIVE COUNCIL TODAY (WEDNESDAY).

CONCLUDING THE BUDGET DEBATE, SIR PIERS SAID HE AGREED THAT OVERSEAS INVESTMENT PLAYED AN IMPORTANT ROLE IN HONG KONG'S ECONOMY.

-

'EXPERIENCE HAS SHOWN THAT SPECIFIC TAX INCENTIVES ARE NOT THE OVERRIDING FACTOR IN ATTRACTING OVERSEAS INVESTMENTS, ALTHOUGH A SIMPLE AND PREDICTABLE TAX REGIME WITH LOW RATES IS NATURALLY OF GREAT IMPORTANCE, HE SAID.

"ACCORDING TO THE NINTH WORLD COMPETITIVENESS REPORT, PUBLISHED IN JULY 1989 BY THE WORLD ECONOMIC FORUM BASED IN GENEVA, HONG KONG MAINTAINED ITS TOP RANKING AMONGST THE NEWLY INDUSTRIALISED ECONOMIES AS AN ATTRACTIVE INVESTMENT LOCATION.

/"THIS IS