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The concession will help to attract overseas issuers to Hong Kong, enlarge our debt market and enhance our competitiveness vis-à-vis other financial centres in the region.

The Bill also seeks to empower the Financial Secretary to exempt by Order in the Gazette an issuer from the credit rating or the $500,000 minimum denomination requirement. The intention is to provide exemption to statutory bodies owned by the Government. We have no doubt about the credit standing of these bodies and there is no need to require an explicit rating for their debt issues. We have also encouraged these bodies to issue lower denomination paper so as to improve small investors' access to high quality Hong Kong dollar debt securities. It would therefore be appropriate to exempt these bodies from the minimum denomination requirement. Any Order made by the Financial Secretary to provide such an exemption is a piece of subsidiary legislation and will be subject to scrutiny by this Council in the normal

manner.

Mr President, with these remarks, I commend the Bill to Members.

End

Inland Revenue (Amendment) (No 3) Bill

Following is a speech by the acting Secretary for the Treasury, Mr Alan Lai, in moving the second reading of the Inland Revenue (Amendment) (No 3) Bill 1996 in the Legislative Council today (Wednesday):

Mr President,

time.

I move that the Inland Revenue (Amendment) (No 3) Bill be read the second

The Bill seeks to include specific exclusions from profits tax liability for certain income derived by non-residents from Hong Kong share trading transactions and bona fide offshore funds managed in Hong Kong. It also seeks to exclude stock brokers and the managers of offshore funds from potential profits tax liability in respect of share trading and fund investment profits derived by non-residents from whom they act as agents. The amendments in fact reflect the existing practices and seek to provide greater certainty to the relevant areas in the legislation. They will help to enhance Hong Kong's status as an international financial centre.

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