Hong Kong politician Leung Chun-ying has outlined a range of initiatives to consolidate and expand the city’s role as a major international financial centre (IFC).
Leung, who has held the post of chief executive officer (CEO) of Hong Kong since July 2012, used his policy address for 2016 top promote the city as an ideal location for setting up corporate treasury centres.
He said that Hong Kong still has “immense potential” for further development as an IFC and the government would “continue to seize the opportunities” created by greater financial liberalisation in mainland China to foster the diversification of the financial services industry.
The government would also continue “to create a favourable tax environment to consolidate Hong Kong’s status as a premier asset management hub in the Asia-Pacific region.” A proposal has already been submitted to introduce a new open-ended fund company structure as an incentive for more funds to domicile in Hong Kong. In addition, the profits tax exemption for offshore funds was extended also to private equity funds last year.
As a further sweetener, the government has proposed interest deductions for corporate intra-group financing, under specified conditions, plus the halving of profits tax for qualifying treasury activities. A bill was tabled in the Legislative Council last month to get this proposal underway.
Leung also confirmed that Hong Kong will pursue free trade agreements (FTAs), investment promotion and protection agreements, double taxation agreements, and air services agreements with its major trading partners.
Hong Kong would step up its engagement with the Association of Southeast Asian Nations (ASEAN) and FTA negotiations with ASEAN are expected to be concluded later this year. Issues being negotiated include the reduction of tariffs and the liberalisation of trade in services and the government also wants to protect investments made by Hong Kong businesses in ASEAN member countries.
The government is also to continue to explore the possibility of joining other FTAs signed, or to be signed, by mainland China; to negotiate with Macao on the establishment of a closer economic partnership arrangement; and to either initiate or continue discussions with Russia, Chile, the United Arab Emirates (UAE) and Mexico on investment protection agreements.
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