(Hong Kong) – Hong Kong’s chief competitor in the region for the foreign business investment, Singapore, has cut taxes in an effort to improve its attractiveness to offshore corporates.Singapore is slicing its top rate for both corporate and personal income tax payers to 20 percent within three years, modest reductions on both the current corporate tax rate of 24.5 percent, and top marginal personal income rate of 26 percent.
Standard rates of tax in Hong Kong are 16 percent for companies and 15 percent for individuals, with only income sourced in Hong Kong being taxed.
Although Singapore has cut direct taxes, it raised its GST to five percent from three percent starting in 2003 at the same time, reducing the likely immediate impact of the former.
Significant investment decisions by the banking industry are expected over the coming 2-3 years as the push to economise in back office and 24×7 processing continues. Australia is also actively competing as a regional financial services hub using its robust infrastructure, relatively economical cost base and high quality labour as key draw cards.