Hong Kong Treasury Centre Growth
(12 July 2018 - Hong Kong) In the battle between Hong Kong and Singapore to become the region’s premier treasury hub, Hong Kong is seen gaining ground.
The Hong Kong Monetary Authority (HKMA) confirmed over 50 corporates have established or are in the process of setting up treasury operations in Hong Kong, reflecting 66 percent growth from 2017.
Most of the corporates are believed to be from mainland China. HKMA said it had noticed a growing momentum of corporates setting up treasury centres in Hong Kong since last year. In 2016, Hong Kong reduced the profits tax by 50 percent to 8.25 percent for qualifying corporate treasury centres. Hong Kong also allows the deduction of interest expenses in calculating profits tax for the intra-group financing business of corporations.
Some of the advantages of setting up a treasury centre in Hong Kong include there being no approval process involved – all requirements are set out in the Inland Revenue Ordinance with no sunset clause. Even so, Hong Kong’s plan to become a treasury hub is not without obstacles. Hong Kong’s high cost of living, especially the high cost of property, has always been cited as a major drawback. Countries such as Thailand are looking to take advantage of their lower costs to grab a slice of the pie.
“We are receiving more enquiries from corporates. The number of corporates in the process of setting up or which have already established CTCs (corporate treasury centres) in Hong Kong has increased from around 30 a year ago to the current 50-plus” quoted a spokesperson from the HKMA. In May the HKMA revealed in the briefing for the legislative council panel on financial affairs that since the tax incentive was set up in 2016, HKMA had contacted more than 300 corporates and more than 40 of them were actively planning to set up or have already set up their CTC in Hong Kong.