XN000022-1991-10-17 — Page 27

THURSDAY, OCTOBER 17, 1991

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NO NEED FOR TAX INCENTIVED

*

THERE IS NOT AT PRESENT ANY NEED TO INTRODUCE SPECIFIC TAX INCENTIVES FOR DOMESTIC AND FOREIGN BUSINESSES, THE COMMISSIONER OF INLAND REVENUE, MR ANTHONY AU-YEUNG, SAID TODAY (THURSDAY).

MR AU-YEUNG SAID THE PRESENT TAX REGIME OF HONG KONG DID HAVE A NUMBER OF ATTRACTIVE FEATURES AND THAT IT WAS NOT PARTICULARLY ONEROUS BY INTERNATIONAL STANDARDS SO FAR AS DETERMINING INVESTMENT DECISIONS WAS CONCERNED.

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SPEAKING AT A LUNCHEON MEETING OF THE AUSTRALIAN CHAMBER OF COMMERCE ON "TAX INCENTIVES DO WE NEED THEM?", THE COMMISSIONER SAID:

"WE DON'T HAVE A WIDE RANGE OF SPECIFIC CONCESSIONS, BUT OUR TAX RATES ARE CERTAINLY LOW.

T

HE POINTED OUT THAT TAX INCENTIVES MIGHT BE PROVIDED IN A WIDE VARIETY OF WAYS.

GENERALLY, HE SAID,

EXEMPTION FROM TAX, RAPID

THEY CONSISTED OF COMPLETE OR PARTIAL

OR ACCELERATED DEPRECIATION, SPECIAL

ALLOWANCES AND DEDUCTIONS, AND CONCESSIONARY RATES OF TAX.

MR AU-YEUNG SAID IT WAS UNDERSTANDABLE FOR VARIOUS INDIVIDUALS AND ORGANISATIONS TO URGE FOR FURTHER TAX INCENTIVES TO BE INCORPORATED INTO THE INLAND REVENUE ORDINANCE.

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"TYPICALLY, THE CALL FOR INCENTIVES GOES ALONG THE LINES THAT AND * BUSINESS TAX BREAKS' ARE NECESSARY IF HONG KONG IS TO ATTRACT RETAIN FOREIGN INVESTORS IN COMPETITION WITH OTHER ECONOMIES IN THE REGION," HE SAID.

HE SAID ONE OF THE MORE FREQUENT SUGGESTIONS WAS THAT REGIONAL HEADQUARTERS OPERATIONS LOCATED IN HONG KONG SHOULD EITHER BE EXEMPTED FROM TAX OR TAXED AT A REDUCED RATE IN RESPECT OF ANY PROFITS MADE FROM THE PROVISION OF SERVICES TO AFFILIATES OUTSIDE HONG KONG.

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"80 THE COMMON THEME UNDERLYING THE LOBBYING IS REGIONAL COMPETITION THE DANGER THAT MINIMAL SPECIFIC INCENTIVES IN HONG KONG WILL LEAD TO BUSINESSES BY-PASSING THE TERRITORY IN FAVOUR OF OTHER COUNTRIES IN THE REGION," HE SAID.

MR AU-YEUNG SAID THE CASE FOR INCENTIVES WAS BASED ON THE PREMISE

BY THAT THEY INDUCED INVESTORS TO BEHAVE IN A MANNER DESIRED GOVERNMENT AND THAT IN THEIR ABSENCE SUCH BEHAVIOUR WOULD NOT BE FORTHCOMING.

HE POINTED OUT THAT THE OTHER MÅIN ARGUMENT PUT FORWARD FOR TAX INCENTIVES WAS THAT THEY REPRESENTED THE SIMPLEST MEANS OF ENCOURAGING GOVERNMENT OBJECTIVES.

1+

"IN MY OPINION THESE ARGUMENTS ARE OF DUBIOUS MERIT,' THE

COMMISSIONER SAID.

FIRST, HE ARGUED, ASSUMED THAT TAXATION WAS THE CONCERN TO A FIRM WHEN IT WAS DECIDING WHERE TO INVEST.

OF

PARAMOUNT

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