HONG KONG: Start-ups in Hong Kong will soon enjoy some tax reprieve, as the government looks to drop taxes for small business. Late this week the Financial Secretary of Hong Kong Paul Chan Mo-po announced that the government was mulling a new tax measure to alleviate the tax burden faced by small and medium sized enterprises in the city.
The new system would be the first major reform in two decades to the taxation of business in the city. Under the newly proposed rules, businesses in Hong Kong would see a tax rate of 10 percent on the first HKD 2 million earned each year. The rate of taxation on any subsequent incomes would rise to the standard current rate of 16.5 percent. It is expected that the decreased tax rate would result in a drop in the collection of tax revenues of approximately HKD 2 billion per year. The new tax measures are aimed at fostering a better business environment for start-ups, and to attract more business from close regional rivals such as Singapore, China, and South Korea. If approved, the new tax rate would be implemented before October this year.
